Semi-Annual Report
Eighteenth fiscal period
May 1, 2012 >>> October 31, 20120

Profile
Nomura Real Estate Office Fund, Inc. (referred to as “Nomura OfficeFund” or the “Company” hereafter) was listed on the Tokyo Stock
Exchange on December 4, 2003 as a real estate investment corporation
formed to own and invest in office properties, subject to the Act on
Investment Trusts and Investment Corporations of Japan. The
Company’s basic investment policy is to assure stable rent revenues andsteady portfolio growth over the medium-to-long-term.
Nomura Real Estate Asset Management Co., Ltd. (referred to as“NREAM” hereafter), a wholly owned subsidiary of Nomura Real Estate
Holdings, Inc. is in charge of asset management on behalf of Nomura
Office Fund in accordance with the basic investment policy as describedabove. Through coordination with Nomura Real Estate Holdings, Inc.
and other group companies, NREAM aims to achieve these goals andmore.

Contents
To Our Investors
Summary of Portfolio Properties
Profile of the Asset Management Company
Performance Report
Financial Section
Business Structure/Corporate Data
Website

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To Our Investors
Dear Investors,
I would like to thank all of you for having given Nomura Real Estate Office Fund, Inc. the opportunity to serve
you in 2012 and tell you how much we look forward to continuing to be a part of your financial portfolio in the coming
year.
Closing of accounts for the 18th fiscal period, which ended October 31, 2012, showed the following results. For
the period, NOF achieved operating revenues of 12,701 million yen, ordinary income of 3,913 million yen, and net
income of 3,912 million yen. Dividends per share totaled 12,824 yen.
Although it was predicted that the Japanese economy would gradually recover on demand from post-quake
projects, prospects have been undermined by the slowing of economic recovery in the U.S., the slowing of growth inChina, and the continuing European debt crisis.
The office rental market showed a tendency toward reduced vacancy rates as the supply of newly-built
buildings in central Tokyo settled; however, rents continued showing a gradual downward trend.

officeUnder these circumstances, NOF focused on stabilizing relocation at a low level through improved tenantsatisfaction, and placed a priority on maintaining and improving occupancy by working to conclude leasing contracts
as soon as units are vacated based on an accurate understanding of characteristics of and market environment
surrounding each property. As a result, the occupancy rate at the end of the 18th period was high at 97.0%, showingthat portfolio management continues to be effective. NOF also maintains a favorable relationship with financial
institutions, which ensures continuing stable fund procurement and the maintenance of sound financial strength.
NOF continues prioritizing stable management over the mid- and long-term to respond to investor need for thebuilding of high-quality assets in and after the next period.
Again, NOF is grateful for the trust you have placed in us and we look forward to serving you in 2013.

Yuichi Maruko
Executive Director
Nomura Real Estate Office Fund, Inc.

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Summary of Portfolio Properties
Completed

Acquired

SRC・RC・S B5/50F

31,500.89

May 1978Dec. 8, 2003

38,730

10.3

Shinagawa-ku, Tokyo

SRC・RC B2/26F

25,127.12

Jun. 1996

Mar. 18, 2005

33,0808.8

Chuo-ku, Tokyo

SRC B3/8F

19,157.05

Apr. 1961

Dec. 5, 2003

20,600

5.5

Shinagawa-ku, Tokyo

S・RC・SRC B2/21F

18,051.60

Jan. 1995

Feb. 27, 2004

14,8003.9

NOF Shinjuku Minamiguchi Bldg.

Shibuya-ku,Tokyo

SRC B2/8F

6,710.15

Apr. 1974

Jun. 25, 2008

12,3003.3

NOF Shibuya Koen-dori Bldg.

Shibuya-ku, Tokyo

SRC・RC B2/8F

3,420.16

Sep. 1987

Sep. 28, 2004

12,000

3.2

Secom Medical Bldg.

Chiyoda-ku, Tokyo

S・SRC B1/7F

8,821.24

Feb. 2005

Sep. 1, 2006

11,500

3.1

NOF Shiba Bldg.

Minato-ku, Tokyo

SRC・S B1/7F

8,165.10

Mar. 1991

May 25, 2004

10,000

2.7

Nishi-Shinjuku Showa Bldg.

Shinjuku-ku, TokyoRC B2/11F

5,686.89

Apr. 1982

Nov. 30, 2005

8,800

2.3

NRE Shibuya Dogenzaka Bldg.

Shibuya-ku, Tokyo

SRC・RC B2/9F

3,436.67

Mar. 1999

Sep. 26, 2008

7,660

2.0

NOF Tameike Bldg.

Minato-ku, Tokyo

SRC B1/9F

4,715.20

Aug. 1959

Sep. 29, 2005

7,400

2.0

Iwamoto-cho Toyo Bldg.

Chiyoda-ku, Tokyo

RC・S B1/9F

4,117.26

Jun. 1993

Jun. 25, 2008

6,020

1.6

NOF Shinagawa Konan Bldg.

Shinagawa-ku, Tokyo

SRC B1/8F

7,667.55

Nov. 1987

Dec. 8, 2003

5,500

1.5

NOF Surugadai Plaza Bldg.

Chiyoda-ku, Tokyo

S・RC B1/8F

4,160.94

Apr. 1997

Feb. 27, 2004

5,150

1.4

PMO Nihonbashi Honcho

Chuo-ku, Tokyo

S・SRC B1/9F

2,450.06

Jun. 2008

Nov. 5, 2008

5,000

1.3

NRE Higashi-nihonbashi Bldg.

Chuo-ku, Tokyo

S・SRC B1/9F

4,554.98

Sep. 1990

Jan. 14, 2009

4,060

1.1

PMO Akihabara

Chiyoda-ku, TokyoS 8F

3,037.37

Jan. 2010

Jan. 13, 2012

3,790

1.0

Hatchobori NF Bldg.

Chuo-ku, Tokyo

SRC B1/9F

2,854.83

Oct. 1990

Aug. 10, 2007

3,160

0.8

NOF Kanda Iwamoto-cho Bldg.

Chiyoda-ku, Tokyo

SRC 9F

4,076.38

Jul. 1988

Feb. 26, 2004

3,080

0.8

NOF Takanawa Bldg.

Shinagawa-ku, TokyoS 8F

3,361.48

Apr. 1993

Feb. 27, 2009

3,010

0.8

PMO Hatchobori

Chuo-ku, Tokyo

S・SRC B1/9F

2,074.66

May 2009

Nov. 1, 2011

2,430

0.6

NOF Minami Shinjuku Bldg.

Shibuya-ku, Tokyo

SRC B1/8F

2,464.71

Mar. 1986

Jun. 25, 2004

2,280

0.6

Central Shintomicho Bldg.

Chuo-ku, TokyoS 8F

2,465.86

Mar. 1990

Jun. 25, 2008

1,750

0.5

PMO Higashi-nihonbashi

Chuo-ku, TokyoS 9F

1,859.43

Oct. 2009

Nov. 1, 2011

1,480

0.4

-

179,937.58--

223,580

59.6

Name

Location

Type of Structure

Shinjuku Nomura Bldg.

Shinjuku-ku, Tokyo

NRE Tennozu Bldg.
NOF Nihonbashi Honcho Bldg.
Tennozu Park Side Bldg.

CentralTokyo

Subtotal （24 properties）% of Total

NRE Ueno Bldg.

Taito-ku, Tokyo

SRC・S B1/10F

4,869.81

Mar. 1990

Jan. 14, 2009

7,830

2.1

NOF Technoport Kamata Center Bldg.

Ota-ku, Tokyo

S・SRC B1/11F

13,652.45

Sep. 1990

Dec. 5, 2003

6,416

1.7

Toho Edogawabashi Bldg.

Bunkyo-ku, Tokyo

SRC B1/9F

2,058.97

Mar. 1993

Mar. 2008

2,080

0.6

Toshin Meguro Bldg.

Meguro-ku, Tokyo

SRC 9F

1,610.07

Sep. 1989

Jun. 25, 2008

1,340

0.4

Crystal Park Bldg.

Musashino City, Tokyo

SRC・S B2/11F

3,900.85

Oct. 1991

Feb. 28, 2006

3,700

1.0

Musashino City, Tokyo

SRC 8F

1,936.40

Oct. 1987

Jan. 14, 2009

1,800

0.5

Tachikawa City, Tokyo

S・SRC・RC B2/12F

6,851.48

Dec. 1994

Dec. 5, 2003

3,290

0.9

NOF Kawasaki Higashiguchi Bldg.

Kawasaki-ku, Kawasaki City

S･SRC B1/12F

8,266.67

Mar. 1988

Jun. 30, 2005

9,500

2.5

NOF Yokohama Nishiguchi Bldg.

Nishi-ku, Yokohama City

SRC B1/9F

6,866.60

Oct. 1985

May 12, 2005

5,050

1.3

NOF Shin-Yokohama Bldg.

Kohoku-ku, Yokohama City

SRC B1/9F

8,074.83

Oct. 1990

Dec. 5, 2003

3,600

1.0

Yokohama Odori Koen Bldg.

Naka-ku,Yokohama City

S・RC B1/11F

4,234.35

Mar. 1989

Sep. 28, 2007

2,993

0.8

-

62,322.48--

47,59912.7

Suburban
NOF Kichijoji Honcho Bldg.
Tokyo
Faret Tachikawa Center Square

Subtotal （11 properties）
Sapporo North Plaza

Chuo-ku, Sapporo City

SRC B2/12F

13,642.16

Aug. 1981

Jun. 1, 2006

6,820

1.8

NRE Sapporo Bldg.

Kita-ku, Sapporo CityS B1/10F

6,559.34

Jul. 2008

Nov. 5, 2008

5,300

1.4

JCB Sapporo Higashi Bldg.

Chuo-ku, Sapporo City

SRC B1/7F

9,062.04

Oct. 1966

Feb. 8, 2008

3,700

1.0

NOF Sendai Aoba-dori Bldg.

Aoba-ku, Sendai City

SRC B2/11F

6,042.82

Jul. 1968

Nov. 30, 2005

3,200

0.9

Baba-dori, Utsunomiya City

S・SRC B2/10F

5,882.20

Dec. 1999

Dec. 5, 2003

2,970

0.8

Naka-ku, Nagoya City

S・RC B1/11F

3,282.90

Aug. 2009

Dec. 25, 2009

4,050

1.1

Nakamura-ku, Nagoya CityS B2/12F

4,655.74

Mar. 1991

Sep. 29, 2005

3,550

0.9

Omron Kyoto Center Bldg.

Simogyo-ku, Kyoto City

S・RC B2/11F

34,616.84

Jul. 2000

Mar. 20, 2007

23,700

6.3

SORA Shin-Osaka 21

Yodogawa-ku, Osaka City

SRC B2/21F

21,298.26

Jul. 1994

Apr. 25, 2008

19,251

5.1

NRE Osaka Bldg.

Chuo-ku, Osaka City

SRC B2/12F

16,977.79

Dec. 1983

Dec. 5, 2003

6,410

1.7

NRE Nishi-Umeda Bldg.

Kita-ku, Osaka City

S・SRC B2/12F

5,213.02

Jun. 1993

Sep. 26, 2008

5,660

1.5

NRE Yotsubashi Bldg.

Nishi-ku, Osaka City

S・SRC B2/15F

11,558.68

Nov. 1991

Dec. 5, 2003

3,940

1.0

NOF Kobe Kaigan Bldg.

Chuo-ku, Kobe City

S・SRC B1/16F

6,425.16

Feb. 1998

Dec. 5, 2003

3,280

0.9

NRE Hiroshima Bldg.

Naka-ku, Hiroshima City

SRC B2/9F

7,827.15

Jul. 1976

Dec. 5, 2003

1,930

0.5

NOF Hakata Ekimae Bldg.

Hakata-ku, Fukuoka City

SRC B2/11F

7,529.83

Jul. 1983

Jun. 27, 2008

6,750

1.8

NOF Tenjin-Minami Bldg.

Chuo-ku, Fukuoka City

S 10F

3,802.35

Feb. 2008

Mar. 27, 2009

3,739

1.0

Subtotal （16 properties）-

164,376.28--

104,250

27.8

Total (51 properties)-

406,636.34--

375,429

100.0

NOF Utsunomiya Bldg.
NOF Nagoya Fushimi Bldg.
NOF Nagoya Yanagibashi Bldg.
Other
CitiesAcquisition Price(Millions of Yen)

Leasable Floor Space（㎡）

RegionNote: NOF has acquired all investment properties identified in the table above in the form of trust beneficial interests, except Secom Medical Building, NRE Shibuya Dogenzaka Building, PMO Nihonbashi
Honcho, NRE Higashi-nihonbashi Building, PMO Akihabara, PMO Hatchobori, NOF Takanawa Building, PMO Higashi-nihonbashi, NRE Ueno Building, Toho Edogawabashi Building, Crystal Park
Building, Yokohama Odori Koen Building, NRE Sapporo Building, JCB Sapporo Higashi Building, NOF Nagoya Fushimi Building, SORA Shin-Osaka 21 and NRE Nishi-Umeda Building in the form of
real estates.
Note: "Abbreviations under ""Type of Structure"" indicate: S: Steel-frame, RC: Reinforced Concrete and SRC: Steel-frame Reinforced Concrete.
According to the notice of confirmation issued in accordance with the Building Standards Act, the floor of NOF Sendai Aoba-dori Building is described as 8 floors above the ground and 3 floors ofpenthouse with 2 floors below ground."Note: "Leasable Floor Space" includes office and retail floor space for investment properties as of a specified date. In principle, exclusive and designated areas acquired under strata (unit) title have been
included. Leased common areas are also included. Leasable floor space for the Shinjuku Nomura Building is the space multiplied by NOF's share of trust beneficial interests acquired. According to themaster lease agreement, the rent of NRE Tennozu Building is the rent of the entire building multiplied by percentage of the share of common area. Thus, its leasable floor space is the floor space of theentire building multiplied by the said percentage. Each Leasable Floor Space indicates as of October 31, 2012.
Note: "Completed" is a completed date of a building written on the title registration form. As for NOF Tameike Building, the date of completion is a date stated on the Certificate of Inspection in accordancewith the provisions of article 7(3) of the Building Standards Act as there is no date stated on the title registration form.
Note: "% of Total" is the percentage of the total portfolio. The figures in the table above have been rounded to the nearest first decimal place. Accordingly, the total may not equal 100.0%
Note: NOF has acquired a trust beneficial interest in the Shinjuku Nomura Building. The acquisition price represents the cost of purchasing 50.1% of the trust beneficial interest.
Note: NOF transferred a part of the land of NOF Technoport Kamata Center Building (co-owned area) on August 31, 2007. The acquisition price on the list is the amount subtracting a book price of the asset
to be transferred (13 million yen) from the acquisition price before the transfer (6,430 million yen). The number of amount below unit is truncated.

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Profile of the Asset Management Company
As of October 1, 2011, Nomura Real Estate Asset Management Co., Ltd. (NREAM) was merged with Nomura Real Estate
Investment Management Co., Ltd. (NREIM) and Nomura Real Estate Capital Management Co., Ltd. (NRECM), with achange of its Japanese trade name from Nomura Fudosan Toshin to Nomura Fudosan Toshi Komon. We believe that theCompany can benefit from various synergy effects from this merger including the ability to quickly respond to changes in thereal estate and financial markets, the enhancement of expertise and experience necessary for real estate investment, and theability to provide asset management services through one of the largest real estate asset management companies in Japan.

Company:
Capital:Shareholder :Incorporation :Nomura Real Estate Asset Management Co., Ltd.
¥300 million (as of October 31, 2012)
Nomura Real Estate Holdings, Inc. (100%)January 24, 2003

・Organization of the asset management company

Profile of Chief Investment Officer
Chief Investment Officer, NOF

Kenji Tsuga

Apr. 1990
Dec. 1996
Mar. 2001
Oct. 2001
Oct. 2004
Oct. 2006
Apr. 2011
Oct. 2011

44Entered NREDBrokerage Sales Dept.
Brokerage Division.
East21 Branch Manager, Nomura Real Estate Urban Net Co., Ltd.
Corporate Planning Dept., Nomura Real Estate Holdings, Inc.
Public Relations/IR Dept.
General Manager, Office Management Division, NREAMNOF Chief Investment Officer, NREAM (current position)

Performance Report

Contents

Asset Management Report……………………..……...
Profile of the Company………………………………..…
Status of Investment Assets of the Company……......
Capital Expenditures………….…………………….......
Expenses and Liabilities……..……………………........
Trading during the Eighteenth fiscal period………
Other Information………………………………………..

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Asset Management Report
1. CHANGES IN KEY INDICATORS
18th Period

17th Period

16th Period

15th Period

14th Period

from May 1, 2012
to Oct. 31, 2012

from Nov 1, 2011
to Apr. 30, 2012

from May 1, 2011
to Oct. 31, 2011

from Nov 1, 2010
to Apr. 30, 2011

from May 1, 2010
to Oct. 31, 2010

Operating Revenues(¥mln)

12,701

12,441

13,637

13,117

13,364of which Real Estate Rental Revenues(¥mln)

12,701

12,441

12,52012,846

13,364

Operating Expenses(¥mln)

7,218

6,912

7,417

6,973

7,141

(¥mln)

6,040

5,726

6,110

5,741

5,883

Operating Profits(¥mln)

5,482

5,529

6,219

6,144

6,223

Ordinary Income(¥mln)

3,913

3,903

4,628

4,503

4,480

Net Income(¥mln)

3,912

3,902

4,627

4,428

4,479

Total Assets(¥mln)

397,375

397,667

400,390404,069

407,703of which Real Estate Rental Expenses(%)(△0.1)(△0.7)(△0.9)(△0.9)(△0.6)

Interest-Bearing Debts(Changes from Previous Period)(¥mln)

182,650

183,400

184,650

187,900

191,230

Net Assets(¥mln)

189,468

189,458

190,082

189,883

189,934(%)(+0.0)(△0.3)(+0.1)(△0.0)(△0.3)

Unitholders’ Capital(¥mln)

185,455

185,455

185,455

185,455

185,455

Number of Units Issued(Units)

305,123

305,123

305,123

305,123

305,123(¥)

620,957

620,923

622,970

622,318

622,486

Total Cash Distribution(¥mln)

3,912

3,902

4,527

4,427

4,479

Cash Distribution per Unit(¥)

12,824

12,79014,837

14,512

14,681of which Cash Distribution of Profits(¥)

12,824

12,79014,837

14,512

14,681of which Cash Distribution in excess of Profits

(¥)

-

-

-

-

-

ROA (Return on Assets) (Note 1)

(%)

1.0

1.0

1.2

1.1

1.1

Annualized ROA (Note2)

(%)

2.0

2.0

2.3

2.2

2.2

ROE (Return on Equity)

(%)

2.1

2.1

2.4

2.3

2.4

Annualized ROE (Note 2)

(%)

4.1

4.1

4.8

4.7

4.7

Capital Adequacy Ratio (Note 4)

(%)

47.7

47.6

47.5

47.0

46.6

(Changes from Previous Period)

Net Assets per Unit(%)(+0.1)(+0.1)(+0.5)(+0.4)(+0.2)LTV (Loan-to-Value) (Note 5)(Changes from Previous Period)

(%)

46.0

46.1

46.1

46.5

46.9

Number of Operating Days

(days)

184

182

184

181

184

(%)

99.9

100.0

97.8

99.9

100.0

Payout Ratio (Note 6)
Number of Properties Held(bldgs)

51

51

48

51

51

Total Leasable Floor Space(㎡)

406,636.34

406,640.49

399,625.36

415,936.86

438,918.56

Number of Tenants(tenants)

793

784

753

746

704

(%)

97.0

97.1

96.4

93.8

94.5

Depreciation(¥mln)

1,669

1,717

1,732

1,861

1,876

Capital Expenditures(¥mln)

827

1,022

1,088

750

597

NOI (Net Operating Income) (Note 7)(¥mln)

8,331

8,432

8,142

8,965

9,357

FFO (Funds from Operation) (Note 8)(¥mln)

5,592

5,632

5,362

6,029

6,363

(¥)

18,32918,46017,573

19,761

20,855

Occupancy Rate

FFO per Unit (Note 9)

Note 1: “ROA (Return on Assets)” = Ordinary Income / {(Total Assets at the beginning of the period + Total Assets at the end of the period) / 2} x 100
Note 2: “ROA” and “ROE” are annualized using the following number of operating days. 14th Period: 184 days, 15th Period:181 days, 16th Period: 184
days, 17th Period: 182 days, and 18th Period: 184 days.
Note 3: “ROE (Return on Equity)” = Net Income / {(Net Assets at the beginning of the period + Net Assets at the end of the period) / 2} x 100
Note 4: “Capital Adequacy Ratio” = Net Assets / Total Assets x 100
Note 5: “LTV (Loan-to-Value)” = Interest-Bearing Debts / Total Assets x 100
Note 6: Rounded off to the first decimal place.
Note 7: “NOI (Net Operating Income)” = Real Estate Rental Revenues – Real Estate Rental Expenses + Depreciation
Note 8: “FFO (Funds from Operation) = Net Income + Depreciation + Amortization of Investment Corporation Bonds Issuance Costs – Real Estate Sale
Profit/Loss
Note 9: “FFO per Unit” = FFO / Number of Units Issued

62. OUTLINE OF INVESTMENTS IN THE EIGHTEENTH FISCAL PERIOD
Nomura Real Estate Office Fund, Inc., incorporated on August 7, 2003 under the Act on Investment Trusts and Investment
Corporations of Japan, listed the unit certificates in the Real Estate Investment Trust (REIT) Market of the Tokyo Stock Exchange
on December 4, 2003 (TSE code 8959). The Company’s basic investment policy is to assure stable income from, and steady
growth of, investment assets over the mid-to-long-term. In accordance with this policy, we invest in properties mostly for officeuse in three largest conurbations and other major cities, or in property-backed securities that are backed by such properties.
Note:
The Act on Investment Trusts and Investment Corporations of Japan (Act No. 198 of 1951) is referred to as the "Investment Trust Act" hereinafter.
The term “unit certificates” are the securities issued by the Company and may be referred to as “investment units” or “units” hereinafter.
The term “investment assets” refers to those assets that belong to the Company.
Unless otherwise stated, for the purpose of this report, the concept of “property(ies)” is construed to include leasehold and superficies.
The term “property(ies)” refers to those assets defined in Section 27, Paragraph 1, Article (1) and (2), and “property-backed securities”
refers to those assets defined in Section 27, Paragraph 1, Article (3) respectively of the Articles of Incorporation of the C ompany.
The terms “property(ies)” and “property-backed securities” are collectively referred to as “property-related assets” hereinafter.
The properties and underlying properties of the property-related assets are collectively referred to as the “investment properties”.

(1) Operating Environment
Although it was predicted that the Japanese economy would gradually recover on demand from post-quake projects, economic
performance shifted downward, mainly in exports and industry production, due to the slowing of economic recovery in the U.S.,
the slowing of growth in in China, and the continuing European debt crisis.
New listings on the J-REIT market were made in the previous fiscal period for the first time in about four and a halfyears, and public offerings for listed shares also continued one after another. REIT share prices recovered with support frompurchases by the Bank of Japan, a shift in foreign investors’ attitude toward purchasing, and an inflow of money to investment
trusts, all contributing to a recovery of the Tokyo Stock Exchange REIT index to 1,000 following late September, a trend thathas continued.
(a) Office Rental Market
After the peak in June 2012, the office rental market showed a tendency for reduced vacancy rates in central Tokyo as therush of newly-completed large buildings settled. Under such circumstances, many companies relocated in line with theirbusiness continuity plans (BCP) and worked to integrate remote offices.
Although rents in some areas show signs of having hit bottom, they continue to follow a gradual downward
trend overall.
(b) Real Estate Market
The motivation of companies and individuals in the wealthy class to acquire real estate continues, and transactions remain
stable with a focus on small- and medium-size buildings. However, information on properties with stable performance isinsufficient, and the gap between what sellers are willing to accept and what potential buyers are offering differs
significantly. Therefore, with the exception of transactions between REITs and its sponsors, the number of transactions
for large properties was limited.
(2) Status of Managements for the Eighteenth Fiscal Period
Abiding by its basic policy of acquiring only properties that would generate stable returns over the mid-to-long-term, theCompany continues to invest in and manage properties that offer outstanding competitiveness in terms of both location andbasic building features, and stable cash flows.
The Company’s total assets under management (“portfolio”) as of the end of the 18th fiscal period (October 31, 2012) was
51 properties (total leasable floor space: 406,636.34 ㎡) totalling 375.4 billion yen (total acquisition price).
The property management environment remained difficult due to the market conditions described in “(1) Operating
Environment (a) Office Rental Market”. Seeking to maintain or increase occupancy rates, the Company took the initiative inattracting prospective tenants, while taking measures to enhance customer satisfaction of existing tenants. In renewing leases,
the Company negotiated terms focusing on minimizing declines in rent levels, while considering individual deviations frommarket rents, sizes of leased areas, and leasing periods.
As a result, the average portfolio occupancy rate as of the end of the fiscal period under review stayed as high as 97.0%
with the move-out area remained at low levels. In addition, making the most of the Nomura Real Estate Group’s (Note)know-how, we also succeeded in keeping earnings stable by management specifications on an individual property basis andtaking other steps to reduce asset management expenses.
Note: “Nomura Real Estate Group” refers to a corporate group consisting of the consolidated subsidiaries of Nomura Real Estate Holdings, Inc. (referred to as
Nomura Real Estate Holdings hereinafter) including Nomura Real Estate Development Co., Ltd. (referred to as “NRED” hereinafter) but excluding Nomura
Real Estate Asset Management Co., Ltd. (referred to as the Asset Management Company hereinafter).

(3) Status of Funding
Concerning funding through interest-bearing debts, the Company has the basic financial policy of funding through promotionof long-term, diversified and fixed interest rate debts, for the purpose of securing financial stability and avoiding future interest
rate risk. Based on this policy, the Company has implemented funding through long-term debts and issuance of investment
corporation bonds, while establishing a commitment line for the purpose of flexible funding at the time of property acquisition
and reduction of refinancing risks, from the perspective of securing stable funding base.
During the period under review, a total of 29.9 billion yen was borrowed and 750 million yen in hand was repaid asrepayment funds for existing debts. As a result, outstanding interest-bearing debt as of the end of the eighteenth fiscal period
came to 182.6 billion yen (including investment corporation bonds of 39.5 billion yen).

7

3. STATUS OF CAPITALNo changes in the number of units issued have been made during the eighteenth fiscal period. Changes in the number of units
issued and unitholders’ capital until the eighteenth fiscal period are as follows.
Date

Type of Issue

Aug. 7, 2003
Dec. 4, 2003
May 19, 2004
Jun. 16, 2004
May 1, 2005
May 24, 2005
May 25, 2006
Jun. 23, 2006
May 27, 2008
Jun. 24, 2008

Initial private placement (Note1)
Public offering (Note2)
Public offering (Note3)
Third-party allotment (Note4)
Public offering (Note5)
Third-party allotment (Note6)
Public offering (Note7)
Third-party allotment (Note8)
Public offering (Note9)
Third-party allotment (Note10)

Number of Units Issued (Unit)
ChangeBalance400
400
148,200
148,600
35,000183,600
1,050
184,650
44,000228,650
1,320
229,970
34,800264,770
1,133
265,903
37,000302,9032,220
305,123

Unitholders’ Capital (¥ mln)
ChangeBalance200
200
71,506
71,706
19,866
91,572595
92,16831,496123,665944
124,610
31,143
155,753
1,013
156,767
27,064
183,831
1,623
185,455

Note 1: Initial private placement at the offer price of ¥500,000 per unit to incorporate the Company.
Note 2: Public offering at the offer price of ¥500,000 (issue price of ¥482,500) to finance acquisition of new properties.
Note 3: Public offering at the offer price of ¥588,000 (issue price of ¥567,600) to finance acquisition of new properties and to repay borrowings.
Note 4: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥567,600 following the public offering on May 19, 2004.
Note 5: Public offering at the offer price of ¥740,782 (issue price of ¥715,837) to finance acquisition of new properties and to repay borrowings.
Note 6: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥715,837 following the public offering on May 1, 2005.
Note 7: Public offering at the offer price of ¥926,100 (issue price of ¥894,915) to finance acquisition of new properties and to repay borrowings.
Note 8: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥894,915 following the public offering on May 25, 2006.
Note 9: Public offering at the offer price of ¥756,560 (issue price of ¥731,470) to redeem the short-term investment corporation bonds and to repay short-term borrowings.
Note 10: Third-party allotment to Nomura Securities Co., Ltd. at the offer price of ¥731,470 following the public offering on May 27, 2008.

[Changes in Price at the Tokyo Stock Exchange]
Changes in prices of the Company’s investment units listed on the Tokyo Stock Exchange are as follows.
18th Period

17th Period

16th Period

15th Period

14th Period

from May 1, 2012
to Oct. 31, 2012

from Nov. 1, 2011
to Apr. 30, 2012

from May 1, 2011
to Oct. 31, 2011

from Nov 1, 2010
to Apr. 30, 2011

from May 1, 2010
to Oct. 31, 2010

High

(¥)

510,000

500,000

595,000

604,000

536,000

Low(¥)

408,000

370,500

418,000

433,000

412,000

4. CASH DISTRIBUTION
In order to qualify for special tax treatment under Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of
1957) to have maximum cash distribution amount treated as deductible dividends, the Company distributed the entire unappropriatedretained earnings except for fractional amounts smaller than one yen per each investment unit. As a result, the amount of cash
distribution per unit for this fiscal period was ¥12,824.
18th Period

17th Period

16th Period

15th Period

14th Period

from May 1, 2012
to Oct. 31, 2012

from Nov. 1, 2011
to Apr. 30, 2012

from May 1, 2011
to Oct. 31, 2011

from Nov. 1, 2010
to Apr. 30, 2011

from May 1, 2010
to Oct. 31, 2010

4,479,515

Retained Earnings(¥000)

3,912,991

3,902,570

4,627,269

4,428,126

Accumulated earnings(¥000)

94

46

100,159181

4

Total cash distribution(¥000)

3,912,897

3,902,523

4,527,109

4,427,944

4,479,510(Cash distribution per unit)of which distribution of profits(¥)(12,824)(12,790)(14,837)(14,512)(14,681)(¥000)

3,912,897

3,902,523

4,527,109

4,427,944

4,479,510(14,681)(¥)(12,824)(12,790)(14,837)(14,512)of which refund of capital(¥000)

-

-

-

-

-

(Refund of capital per unit)

(¥)

(-)

(-)

(-)

(-)

(-)

(Distribution of profits per unit)8

5. INVESTMENT POLICY AND FUTURE ISSUES(1) Investment Environments
As mentioned in “2. OUTLINE OF INVESTMENTS IN THE EIGHTEENTH FISCAL PERIOD (1) Market Environments,” it ispredicted that the Japanese economy will be weakening for the moment because of the downturn in the global economy. If theoverseas economy improves while the demand from post-quake projects continues, it is expected that the Japanese economy will getback on track for recovery. However, anxiety about the potential elongation of the European debt crisis and worsening ties with
China may continue to significantly undermine prospects.
Under the circumstances, it is important to continue flexible property management based on an accurate understanding of
tenant needs, minimize the deterioration of portfolio profitability, maintain and improve the ability to procure funds throughconservative financial management, and keep a sharp eye on the movement of real estate market capitalization rates and liquidity.
(2) Asset Management Policy and Future Issues
With such environments in mind, the Company will employ the following asset management policies to ensure stable income
from, and steady growth of the portfolio over the mid-to-long-term.
(a) Property Management in a Mid-to-Long-Term View
In addition to enhancement of property management to satisfy the requirements of existing tenants to enhance the relationship,and keep their evacuation at low level, proper recognition of the property features and leasing market environments will help us
market the potential tenants from in and outside of the properties for existing and future vacant space. Thus we will maintainand uplift the occupancy rate and level of rents in pursuit of sustainable and improved profitability of portfolio, namely internal
growth of portfolio.
In order to ensure stable revenues over the mid-to-long-term, we will carry out strategic refurbishment and renovation
works to maintain and/or improve features of the properties, establishing their uniqueness and increasing their competitiveness.
(b) Enlargement of Portfolio by Acquisition of New Properties
The Company has set in motion several strategic measures; that is, targeting the expansion of asset size up to ¥500 billion in themedium term in order to achieve higher revenue (i.e. external growth); replacing our property portfolio to enhance its quality;
ensuring the portfolio is well-balanced and diversified to minimize fluctuation risks in revenue; and maximizing the advantage ofscale to reduce operational and administration costs.
In order to make right investments in properties of good value, we will ensure to collect information on properties for sale inan early stage, and conduct an in-depth due diligence to assess the potential risks involved in such investments. As part of ourefforts to carry out this investment policy, we will work to find investment opportunities through further expansion of our own
sourcing network as well as cooperation with other companies of Nomura Real Estate Group, and to make appropriate
investment decisions based on our market research capabilities and technical expertise.
In making an investment decision, we adhere to strict criteria to select best properties that can bring stable revenues to theentire portfolio in light of mid- and long-term perspectives.
(c) Continuation of Conservative Financial Policy
In order to assure stable financing capability and increase creditworthiness in the market over the mid-to-long-term, we will pay
particular attention to debt finance. We will seek to continuously keep the LTV low by using more long-term funding atfixed-rates, fixing the rate by using interest rate swap transactions or other methods, diversifying the repayment dates, andincreasing the number of institutions we bank with.
We will closely monitor the conditions of financial markets, and carefully deliberate and choose the best means of funding,including the usage of commitment lines, issuance of investment corporation bonds and short-term investment corporation bonds
from a wide range of available sources of funding to ensure a well-balanced structure of interest-bearing debts.

6. IMPORTANT EVENTS SUBSEQUENT TO THE EIGHTEENTH FISCAL PERIOD
Transfer of a Property
On December 21, 2012, the Company entered into a sale and purchase agreement regarding the transfer of the property stated below
and on January 17, 2013, completed the transfer. Consumption taxes and adjustments of property taxes are excluded from the transfer
price.
NOF Kobe Kaigan Building
Type of Assets
Date of Agreement
Transfer Date
Transfer Price
Transferee
Impact on Revenues: Trust beneficial interest: December 21, 2012
: January 17, 2013
: ¥3,050 million: Japanese general operating company: Approximately ¥236 million (miscellaneous expenses excluded) of gain on sales of real estate will berecorded for the nineteenth fiscal period (from November 1, 2012 to April 30, 2013).

9

Profile of the Company
1. STATUS OF UNITHOLDERS’ CAPITAL
18th Period(as of Oct. 31, 2012)

17th Period(as of Apr. 30, 2012)

16th Period(as of Oct. 31, 2011)

15th Period(as of Apr. 30, 2011)

14th Period(as of Oct. 31, 2010)

Maximum number of units allowed to
issue(Unit)

2,000,000

2,000,000

2,000,000

2,000,000

2,000,000

Number of units issued(Unit)

305,123

305,123

305,123

305,123

305,123

Amount of unitholders’ capital(¥ mln)185,455

185,455

185,455

185,455

185,455

12,61012,713

12,864

12,185

13,100

Number of unitholders

2. MATTERS CONCERNING THE INVESTMENT UNITS
The 10 largest unitholders as of October 31, 2012 were as follows.
Number of Units Held
(Unit)Name

Japan Trustee Services Bank, Ltd.
Trust & Custody Services Bank, Ltd.
The Nomura Trust and Banking Co., Ltd.
Nomura Real Estate Development Co., Ltd.
The Master Trust Bank of Japan, Ltd.
Nomura Bank (Luxembourg) S.A.
Kawasaki Gakuen
The Senshu Ikeda Bank, Ltd.
MetLife Alico Life Insurance K.K. GA Company JPY
State Street Bank and Trust Company 5052223

Portion in the Total Units Issued(%)

65,936
16,686
15,667
15,287
11,694
7,118
7,000
6,235
3,700
3,508
152,831

Total

21.61
5.47
5.13
5.01
3.83
2.33
2.29
2.04
1.21
1.15
50.09

3. BREAKDOWN OF UNITHOLDERS
The breakdown of unitholders as of October 31, 2012 was as follows.
Number ofUnitholders

Private and other investors

Number of Units
per Unitholder

Portion (%)

Portion (%)

11,981

95.0

34,123

11.2

Financial institutions(Including Financial Instruments Business Operator)

134

1.1

174,934

57.3

Other domestic corporate investors

208

1.6

32,086

10.5

Foreign corporate investors, etc.

287

2.3

63,98021.0

12,610100.0305,123

100.0

Total

10

4. DIRECTORS AND AUDITOR(1) Name of directors and an auditor in the eighteenth fiscal period are as follows (Note 1)
Title

Other Major Title (s)Name

Executive Director

Yuichi Maruko

Corporate Auditor, MEGALOS, Co., Ltd.
Representative Lawyer, Yoshida Shuhei Law Office
Supervisory Director, Nomura Real Estate Residential Fund, Inc.
Director, Fair Appraisers, K.K.
Supervisory Director, Nomura Real Estate Residential Fund, Inc.

Total Amount of Fees Paid
during the 18th Period (¥000)

2,400Supervisory Director

Shuhei Yoshida (Note 2)

1,200

Supervisory Director

Eitoku Aikawa (Note 3)

Supervisory Director

Saneaki IchijoPartner, Anderson Mori & Tomotsune Law Firm

2,400

Supervisory Director

Naohito Miya

Manager of Miya Naohito CPA Firm
Senior Representative partner, Futaba Audit Corporation

2,400

Accounting Auditor

Ernst & Young ShinNihon LLC––

14,5002,400

Note 1:No Executive Directors or Supervisory Directors are in possession of the Company’s investment units either under their own or other person’s name otherthan Mr. Yuichi Maruko possesses two units of the Company’s investment units as of October 31, 2012. Executive Directors and Supervisory Directors
might serve as directors of other companies, but there are no mutual business interests whatsoever between such companies and the Company.
Note 2: Mr. Shuhei Yoshida resigned as Supervisory Director with effect from August 7, 2012.
Note 3: Mr. Eitoku Aikawa resigned as Supervisory Director with effect from December 31, 2012.
Note 4: At the Fifth General Unitholders’ Meeting held on July 28, 2011, Mr. Kenji Tsuga, NOF Chief Investment Officer of the Asset Management Company,
Nomura Real Estate Asset Management Co., Ltd., has been appointed as substitute Executive Director, to provide against vacancy of the Executive
Director’s position or lack of statutory quorum.

(2) Policy on Determination of Dismissal and Denial of Reappointment of Accounting Auditors
In case an item listed under Article 105, Paragraph 1 of the Investment Trust Act becomes applicable to the accounting auditor, andthe Board of Directors determines that there is no likelihood of improvement, the Board of Directors shall dismiss the accounting
auditor by unanimous vote of all board members.
In addition, if the Board of Directors determines that the accounting auditor is inappropriate for the position having given
thorough consideration to its business execution and other various reasons, the Board of Directors shall dismiss or denyreappointment of the accounting auditor, and present an agenda for appointment of a new accounting auditor at the General
Unitholders’ Meeting.
5. ASSET MANAGEMENT COMPANY, CUSTODIANS AND ADMINISTRATORS
Asset Management Company, custodians and administrators as of October 31, 2012 are as follows:Business

Company Name(s)Asset Management Company

Nomura Real Estate Asset Management Co., Ltd.

Custodian of assets

Mitsubishi UFJ Trust and Banking Corporation

Custodian of unitholders’ register

Mitsubishi UFJ Trust and Banking Corporation(Note 1), The Bank of Tokyo-Mitsubishi UFJ, Ltd.(Note 2),
Sumitomo Mitsui Banking Corporation(Note 2)

Manager of special accounts

Mitsubishi UFJ Trust and Banking Corporation

Administrative agent(accounting, etc.)

Mitsubishi UFJ Trust and Banking Corporation

Administrative agent(investment corporation bonds)

The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation, Nomura Securities Co., Ltd.,
Mizuho Securities Co., Ltd.

Administrative agent
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
(short-term investment corporation bonds)
Note 1: Administrates preparation, retention and other tasks related to the Unitholders’ Register.
Note 2: Administrates preparation, retention and other tasks related to the Investment Company Bond Register.

11

Status of Investment Assets of the Company
1. COMPOSITION OF ASSETS
18th Period (as of Oct. 31, 2012)
Total AmountPortion(¥ mln) (Note 2)(%) (Note 3)
38,160Area(Note 1)

Type of Assets

Central Tokyo
Real estate

9.6

17th Period (as of Apr. 30, 2012)
Total AmountPortion(¥ mln) (Note 2)(%) (Note 3)
38,3199.6

Suburban Tokyo

16,291

4.1

16,319Other Regional Cities

36,9009.3

37,051

9.3

Central Tokyo

182,94146.0

183,003

46.0

Suburban Tokyo

30,082

7.6

30,216

7.6

Other Regional Cities

64,24416.2

64,577

16.2

Subtotal

368,62192.8

369,488

92.9

Cash, deposits and other assets

28,754

7.2

28,179

7.1

Real estate in trust

4.1

Grand Total
397,375
100.0
397,667
100.0
Note 1: “Central Tokyo” refers to Chiyoda, Chuo, Minato, Shinjuku, Shinagawa and Shibuya Wards; “Suburban Tokyo” refers to Tokyo excluding the Central
Tokyo area, Kanagawa, Saitama and Chiba: “Other Regional Cities” refers to areas other than Central Tokyo and Suburban Tokyo. The same applies
hereafter.
Note 2: Total amount is taken from the balance sheet. (Real Estate and Real Estate in Trust represent the total book value after depreciation.)
Note 3: The percentage figures may not necessarily add up to 100.0 due to rounding to the nearest first decimal place.

2. BRIEF OF MAJOR PROPERTIES OWNED
The major components of assets (the 10 largest properties by book value) as of October 31, 2012 are as follows.
Name of Property

Book Value(¥ mln)Leasable Floor
Space(m2)(Note 1)

Leased Space(m2) (Note 2)

Occupancy Rate(%)

Portion of
Rental Revenues(%)

Primary Use

Shinjuku Nomura Bldg.

39,72731,500.89

31,250.49

99.2

13.2

OfficeNRE Tennozu Bldg.

32,51325,127.12

25,127.12

100.0(Note 3)

OfficeOmron Kyoto Center Bldg.

22,04834,616.84

34,616.84

100.0(Note 3)

OfficeNOF Nihonbashi Honcho Bldg.

20,55019,157.05

18,378.83

95.9

5.7

OfficeSORA Shin-Osaka 21

18,581

21,298.26

20,999.46

98.6

4.3

OfficeTennozu Park Side Bldg.

12,56018,051.60

17,553.47

97.2

5.1

OfficeNOF Shibuya Koen-dori Bldg.

12,5573,420.16

3,420.16

100.0

2.6

OfficeNOF Shinjuku Minamiguchi Bldg.

12,3586,710.15

6,710.15

100.0

2.4

Secom Medical Bldg.

11,014

8,821.24

8,821.24

100.0(Note 3)

OfficeMedical Office(Note 4)

NOF Shiba Bldg.

10,001

8,165.10

8,165.10

100.0

Total

191,915

176,868.41

175,042.86

99.0

2.1
48.0
(Note 5)Note 1:

Note 2:

Note 3:Note 4:Note 5:

Office“Leasable Floor Space” refers to the total leasable space for each asset including offices and shops (for properties owned in compa rtments, this generally
refers to exclusively owned area; however, common spaces will be included if they are being leased. For Shinjuku Nomura Building, the area calculated bymultiplying the overall leasable floor space by the quasi co-ownership ratio of the beneficial interest in real estate trust owned by the Company. For NRE
Tennozu Building, includes the area calculated by multiplying the overall common space by the co-ownership ratio for the common spaces prescribed in
the terms of management of the building owned by the Company through the trustee.), at a certain time. Leasable floor space i s calculated not based on the
total floor space stated on the registry book, but based on the area stated on the building completion drawing, etc. included in the lease agreement. As such,it may differ from and exceed the total floor space stated on the registry book.
“Leased Space” refers to the area included in the leasable floor space of each asset and is actually leased based on a lease agreement (provided, however, it
is limited to office and shop spaces (where the entire leased floor space is being leased as a whole, the total area of the leased floor space.), and does notinclude leased parking spaces. For Shinjuku Nomura Building, the area calculated by multiplying the overall leased space by t he quasi co-ownership ratioof the beneficial interest in real estate trust owned by the Company. For NRE Tennozu Building., includes the area calculated by multiplying the overallcommon space by the co-ownership ratio for the common spaces (as prescribed in the terms of management of the building) owned by the Company
through the trustee.).
Not disclosed due to compelling reasons.
Although this property is currently registered as “clinic/parking” on the registry book, it was originally designed to be used as offices. The Company’s
Articles of Incorporation allows us to invest in the non-office properties given that they can easily be converted into offices.
“Total” for “Portion of Rental Revenues” column include rental revenues for properties which do not disclose “Portion of Rental Revenues” due tounavoidable reasons.

123. DETAILS OF PORTFOLIO PROPERTIES
Area

Name of Property

Location(Postal Address)

Type ofOwnership

Appraisal Valueas of Oct. 31,
2012 (¥ mln)
(Note 1)

Book Value(¥ mln)(Note 2)45,00039,72722,70032,513

21,40020,55015,40012,5609,530

12,35820-17 Udagawa-cho, Shibuya-ku, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

11,50012,5577-7 Niban-cho, Chiyoda-ku, Tokyo (Note 4)

Real Estate

10,60011,0147,600

10,001

7,850

8,682

Shinjuku Nomura Bldg. (Note 3)

1-26-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo

NRE Tennozu Bldg.

2-4-11 Higashi-Shinagawa, Shinagawa-ku, TokyoNOF Nihonbashi Honcho Bldg.

2-7-1 Nihonbashi-Honcho, Chuo-ku, Tokyo

Tennozu Park Side Bldg.

2-5-8 Higashi-Shinagawa, Shinagawa-ku, TokyoNOF Shinjuku Minamiguchi Bldg.

2-4-9 Yoyogi, Shibuya-ku, TokyoNOF Shibuya Koen-dori Bldg.
Secom Medical Bldg.

Central TokyoNOF Shiba Bldg.

4-2-3 Shiba, Minato-ku, Tokyo

Nishi-Shinjuku Showa Bldg.

1-13-12 Nishi-Shinjuku, Shinjuku-ku, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

NRE Shibuya Dogenzaka Bldg.

2-16-4 Dogenzaka, Shibuya-ku, Tokyo

Real Estate

5,910

7,552

NOF Tameike Bldg.

1-1-14 Akasaka, Minato-ku, Tokyo

6,310

7,525

Iwamoto-cho Toyo Bldg.

3-1-2 Iwamoto-cho, Chiyoda-ku, Tokyo

4,250

6,003

NOF Shinagawa Kounan Bldg.

1-2-5 Higashi-Shinagawa, Shinagawa-ku, Tokyo

5,090

5,354

NOF Surugadai Plaza Bldg.

2-5-12 Kanda Surugadai, Chiyoda-ku, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

6,120

4,849

PMO Nihonbashi Honcho

4-12-20 Nihonbashi Honcho, Chuo-ku, Tokyo

Real Estate

4,070

4,818

NRE Higashi-nihonbashi Bldg.

1-1-7 Higashi-nihonbashi, Chuo-ku, Tokyo

Real Estate

3,490

4,023

PMO Akihabara

3-11-6 Iwamoto-cho, Chiyoda-ku, Tokyo

Real Estate

3,810

3,798

2,610

3,152

3,970

3,053

Hatchobori NF Bldg.

2-21-6 Hatchobori, Chuo-ku, TokyoNOF Kanda Iwamoto-cho Bldg.

3-8-16 Iwamoto-cho, Chiyoda-ku, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate TrustNOF Takanawa Bldg.

2-20-4 Higashi Gotanda, Shinagawa-ku, Tokyo

Real Estate

2,580

3,049

PMO Hatchobori

3-22-13 Hatchobori, Chuo-ku, Tokyo

Real Estate

2,520

2,426

NOF Minami-Shinjuku Bldg.

5-32-7 Sendagaya, Shibuya-ku, Tokyo

2,140

2,291

Central Shintomocho Bldg.

3-5-10 Minato, Chuo-ku, Tokyo

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

1,320

1,757

PMO Higashi-nihonbashi

2-15-4, Nihonbashi, Chuo-ku, Tokyo

Real Estate

Subtotal

1,540

1,477

207,310221,102

1-14-4, Higashi-Ueno, Taito-Ku, Tokyo

Real Estate

6,210

7,771

NOF Technoport Kamata Center Bldg.

2-16-1 Minami-Kamata, Ota-ku, Tokyo

Beneficial Interest
in Real Estate Trust

6,020

6,446

Toho Edogawabashi Bldg.

1-24-8 Sekiguchi Bunkyo-ku, Tokyo

Real Estate

1,270

2,049

Toshin Meguro Bldg.

2-20-28 Shimo Meguro, Meguro-ku, Tokyo

Beneficial Interest
in Real Estate Trust

948

1,322

Crystal Park Bldg.

1-1-3 Gotenyama, Musashino City, Tokyo

Real Estate

3,180

3,567

1,620

1,823

3,900

2,912

7,550

9,320

4,800

4,980

2,700

3,277

1,830

2,902

NRE Ueno Bldg.

Suburban TokyoNOF Kichijoji Honcho Bldg.

1-10-31, Kichijoji Honcho, Musashino City, Tokyo

Faret Tachikawa Center Square

2-36-2 Akebono-cho, Tachikawa City, TokyoNOF Kawasaki Higashiguchi Bldg.
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
Yokohama Odori Koen Bldg.

3-1 Ekimae Honcho, Kawasaki-ku, Kawasaki City,
Kanagawa (Note 4)
1-11-11 Kita-Saiwai, Nishi-ku, Yokohama City,
Kanagawa
2-15-16 Shin-Yokohama, Kohoku-ku, Yokohama
City, Kanagawa
2-4-1 Horai-cho, Naka-ku, Yokohama City,
Kanagawa(Note 4)

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Real Estate

Subtotal
Sapporo North PlazaNRE Sapporo Bldg.
Other Cities

JCB Sapporo Higashi Bldg.

4-2-2 Kitaichijo-nishi, Chuo-ku, Sapporo City,
Hokkaido (Note 4)
2-15-1, Kitashichijyo-Nishi, Kita-ku, Sapporo City,
Hokkaido(Note 4)
1-1 Minamiichijo-Nishi Chuo-ku, Sapporo City
(Note 4)40,02846,373

Beneficial Interest
in Real Estate Trust

5,820

7,652

Real Estate

4,560

4,955

Real Estate

3,220

3,583

2,000

3,128

2,340

2,320

2,270

4,087

NOF Sendai Aoba-dori Bldg.

2-1-2 Ichiban-cho, Aoba-ku, Sendai City, Miyagi

NOF Utsunomiya Bldg.

2-1-1 Baba-dori, Utsunomiya City, Tochigi

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate TrustNOF Nagoya Fushimi Bldg.

2-9-27 Nishiki, Naka-ku, Nagoya City, Aichi

Real Estate13

1-16-28 Meieki-Minami, Nakamura-ku, Nagoya
City, Aichi
801 Minami Fudodo-cho, Horikawa Higashi-iru,
Shiokoji-dori, Shimogyo-ku, Kyoto City, Kyoto(Note 4)

Beneficial Interest
in Real Estate Trust

2,190

3,616

Beneficial Interest
in Real Estate Trust

19,20022,0482-1-3 Nishi-Miyahara, Yodogawa-ku, Osaka City

Real Estate

12,60018,581NRE Osaka Bldg.

1-8-15 Azuchi-cho, Chuo-ku, Osaka City, Osaka

Beneficial Interest
in Real Estate Trust

6,630

6,230

NRE Nishi-Umeda Bldg.

2-1-22, Umeda, Kita-Ku, Osaka City, Osaka

Real Estate

3,210

5,692

4,200

3,755

2,330

2,736

2,270

2,539

4,340

6,572

NOF Nagoya Yanagibashi Bldg.
Omron Kyoto Center Bldg.
SORA Shin-Osaka 21

NRE Yotsubashi Bldg.

1-4-4 Awaza, Nishi-ku, Osaka City, Osaka

NOF Kobe Kaigan Bldg.

3 Kaigan-dori, Chuo-ku, Kobe City, Hyogo (Note 4)

NRE Hiroshima Bldg.
NOF Hakata Ekimae Bldg.
NOF Tenjin-Minami Bldg.

2-23 Tatemachi, Naka-ku, Hiroshima City,
Hiroshima
1-15-20 Hakata Ekimae, Hakata-ku, Fukuoka City,
Fukuoka
3-6-15 Watanabe Dori, Chuo-ku,Fukuoka City,
Fukuoka

Subtotal
Grand Total

Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust
Beneficial Interest
in Real Estate Trust

2,220

3,642

79,400101,145

326,738

368,621“Appraisal Value as of Oct. 31, 2012” stands for the prices appraised by the estate surveyors in accordance with the provisions of the Company’s Articles
of Incorporation and the “Rules Concerning Calculations of Investment Corporations” (Cabinet Office Ordinance No. 47 of 2006). The appraisal prices arecalculated by Japan Real Estate Institute, The Tanizawa Sogo Appraisal Co., Ltd., Daiwa Real Estate Appraisal, Co., Ltd., Japan Valuers Co., Ltd.,
Appraisal Firm A-Square, Ltd., or Morii Appraisal & Investment Consulting Inc. using the capitalization approach, with the end of the Eighteenth Fiscal
Period, i.e. October 31, 2012, being taken as the point of evaluation.
Note 2: “Book Value” stands for the aggregate purchase price of lands, buildings, structures, machinery and equipments, tools and fixtures, leased assets,
construction in progress, and leaseholds owned directly or held in trust, less depreciation including expenses associated wit h these purchases.
Note 3: The Company’s stake in this property is quasi co-ownership of 50.1% of entirety. The appraisal value and book value as of October 31, 2012 accounted
solely for the quasi co-ownership.
Note 4: Residential indication of the property is not available yet.
Note 1:14

18th Period (from May 1, 2012 to Oct. 31, 2012)
Area

at Period End

Name of Property
NumberofTenants(Note 1)

Occupancy
Rate (%)

RentalRevenues
during the
Period(¥ mln)17th Period (from Nov. 1, 2011 to Apr. 30, 2012)at Period End

Portion of
RentalRevenues(%)

NumberofTenants(Note 1)

Occupancy
Rate (%)

RentalRevenues
during the
Period(¥ mln)Portion of
RentalRevenues(%)

Shinjuku Nomura Bldg.

98

99.2

1,682

13.2

96

97.9

1,626

13.1

NRE Tennozu Bldg.

6

100.0

(Note 2)

(Note 2)

6

100.0

NOF Nihonbashi Honcho Bldg.

15

95.9

725

5.7

16

98.6

(Note 2)
743

(Note 2)
6.0

Tennozu Park Side Bldg.

15

97.2

647

5.1

15

97.2

644

5.2
1.9

NOF Shinjuku Minamiguchi Bldg.

16

100.0

308

2.4

15

100.0

235

NOF Shibuya Koen-dori Bldg.

3

100.0

326

2.6

3

100.0

331

2.7

Secom Medical Bldg.

1

100.0

(Note 2)

(Note 2)

1

100.0

NOF Shiba Bldg.

9

100.0

264

2.1

9

100.0

(Note 2)
237

(Note 2)
1.9

Nishi-Shinjuku Showa Bldg.

19

100.0

265

2.1

18

95.5

260

2.1

NRE Shibuya Dogenzaka Bldg.

6

76.8

149

1.2

7

88.4

160

1.3

97.4

196

1.6
1.1

Central TokyoNOF Tameike Bldg.

12

97.4

199

1.6

12

Iwamoto-cho Toyo Bldg.

7

100.0

146

1.2

7

100.0

140

NOF Shinagawa Kounan Bldg.

5

85.5

184

1.5

5

85.5

184

1.5

NOF Surugadai Plaza Bldg.

1

100.0

(Note 2)

(Note 2)1100.0(Note 2)

(Note 2)

PMO Nihonbashi Honcho

7

100.0

104

0.8

6

87.5

116

0.9

NRE Higashi-nihonbashi Bldg.

6

100.0

143

1.1

6

100.0

143

1.2

PMO Akihabara

5

100.0

111

0.9

5

100.0

59

0.5

Hatchobori NF Bldg.

7

100.0

100

0.8

7

100.0

99

0.8

NOF Kanda Iwamoto-cho Bldg.

8

100.0

118

0.9

8

100.0

129

1.0

NOF Takanawa Bldg.

15

100.0

107

0.8

15

96.4

106

0.9
0.6

PMO Hatchobori

8

100.0

86

0.7

8

100.0

79

NOF Minami-Shinjuku Bldg.

3

93.2

83

0.7

4

93.2

90

0.7

Central Shintomicho Bldg.

5

86.9

56

0.4

6

100.0

55

0.4

PMO Higashi-nihonbashi

8

100.0

59

0.5

8

100.0

54

0.4

Subtotal

285

97.7

(Note 4)(Note 4)

284

97.8

(Note 4)(Note 4)

NRE Ueno Bldg.

10

100.0

220

1.7

10

100.0

222

1.8

Technoport Kamata Center Bldg.

13

92.2

335

2.6

12

92.7

324

2.6

Toho Edogawabashi Bldg.

6

65.7

56

0.4

7

100.0

58

0.5
(Note 2)1100.0(Note 2)

(Note 2)

1

100.0

Crystal Park Bldg.

12

98.6

128

1.0

12

98.6

119

1.0

NOF Kichijoji Honcho Bldg.

7

100.0

70

0.6

7

100.0

69

0.6

Faret Tachikawa Center Square

17

97.3

213

1.7

17

97.3

213

1.7

NOF Kawasaki Higashiguchi Bldg.

29

97.1

308

2.4

27

93.5

313

2.5

NOF Yokohama Nishiguchi Bldg.

30

93.3

212

1.7

28

98.7

218

1.8

NOF Shin-Yokohama Bldg.

10

100.0

164

1.3

10

100.0

161

1.3

Yokohama Odori Koen Bldg.

16

93.2

99

0.8

18

100.0

99

0.8
(Note 4)
2.7

Suburban Tokyo

Toshin Meguro Bldg.

(Note 2)

Subtotal

151

95.2

(Note 4)(Note 4)

149

97.0

(Note 4)

Sapporo North Plaza

49

100.0

336

2.6

45

94.9

330

NRE Sapporo Bldg.

6

100.0

198

1.6

6

98.2

203

1.6

JCB Sapporo Higashi Bldg.

1

100.0

(Note 2)

(Note 2)1100.0(Note 2)

(Note 2)Other Cities

NOF Sendai Aoba-dori Bldg.

32

93.0

131

1.0

30

93.0

130

1.0

NOF Utsunomiya Bldg.

24

95.6

148

1.2

24

95.7

150

1.2

NOF Nagoya Fushimi Bldg.

15

89.9

77

0.6

16

89.9

73

0.6

NOF Nagoya Yanagibashi Bldg.

14

92.6

117

0.9

14

92.6

111

0.9

Omron Kyoto Center Bldg.

1

100.0

(Note 2)

(Note 2)1100.0(Note 2)

(Note 2)

SORA Shin-Osaka 21

33

98.6

546

4.3

34

99.3

522

4.2

NRE Osaka Bldg.

25

100.0

427

3.4

25

100.0

414

3.3

NRE Nishi-Umeda Bldg.

15

92.2

150

1.2

15

92.2

143

1.2

NRE Yotsubashi Bldg.

22

97.5

285

2.2

21

99.7

289

2.3

NOF Kobe Kaigan Bldg.

32

82.2

150

1.2

33

85.8

152

1.2

NRE Hiroshima Bldg.

18

88.7

153

1.2

17

81.9

156

1.3

NOF Hakata Ekimae Bldg.

47

94.3

184

1.5

47

94.7

179

1.4
0.6

NOF Tenjin-Minami Bldg.
Subtotal
Grand Total
Note 1:

23

86.7

76

0.6

22

86.8

75

357

96.8

(Note 4)(Note 4)

351

96.3

(Note 4)(Note 4)

793

97.0

12,701(Note 5)

100.0

784

97.1

12,441(Note 5)100.0

In the case a master lease agreement is in place, in which the master tenant of the said lease agreement subleases a part or whole of the leased floor spaces to the end
tenants, only the master tenant is counted as the number of tenants. For NRE Tennozu Building and PMO Nihonbashi Honcho, PMO Akihabara, PMO Hatchobori,and PMO Higashi-nihonbashi, which involves a “pass-through type” master lease agreement where the amount of rent received from the master tenant is the same as
the rent received by said master tenant from the end tenant, the total number of end tenants is shown. In the case more than one space within the same building areleased by the same tenant, such spaces are combined to count for just one tenant. However, when the same tenant leased floor spaces in more than one building, such
spaces are counted separately for each building as if they are leased by different tenants. As for Shinjuku Nomura Building and NOF Toyo-cho Building, the number15

of tenants in the entire building is taken into account.
Note 2: Not disclosed due to compelling reasons.
Note 3: The amount mentioned in “Rental Revenues during the Period” of PMO Akihabara in the 17th period is the amount after acquisition date: Jun. 13, 2012.
Note 4: Subtotals of “Rental Revenues” and "Portion of Rental Revenues” for each area of the 18th period are not disclosed due to compelling reasons.
Note 5: Grand total of “Rental Revenues” is including the amounts which are not disclosed due to compelling reasons.

4. OUTSTANDING AMOUNT AND CURRENT PRICE OF SPECIFIED TRANSACTIONS
The outstanding amount and current price of the specified transactions as of October 31, 2012 are as follows.
Segment

Contract AmountType of Transaction(¥ mln) (Note1)
Longer than a Year

Transaction other than market
transaction

Interest-rate swap
(Receiving floating-rate, paying fixed-rate)
Total

Note 1:
Note 2:Current Price(¥ mln) (Note2)

94,35074,850△678

94,35074,850△678

Presented based on notional principal of contract.
Evaluated at the price provided by the counterparty based on the prevailing market rate.

5. STATUS OF THE OTHER ASSETS
Other than the Trust Beneficial Interest and Real Estate listed in the table under the title “3. Details of Portfolio Properties”, theCompany had no other assets to integrate into the portfolio as of October 31, 2012.

6. STATUS OF ASSETS BY COUNTRY AND REGION
As of the end of the eighteenth fiscal period, the real estate and beneficial interest in real estate trust held by the Company by country
and region are as follows.

Country

Note 1:
Note 2:

Total Portfolio Amount(Note 1)

Appraisal Value as of Oct. 31, 2012 (Note2)
Number of Properties
Portion of Total Portfolio

Japan¥368,621 million¥326,738 million

100.0%

51

Total¥368,621 million¥326,738 million

100.0%

51

Total portfolio amount stands for the book value after depreciation and amortization.
Appraisal value as of Oct. 31, 2012 stands for the value appraised by the real estate appraisers.

16

Capital Expenditures
1. PLAN OF CAPITAL EXPENDITURES
The table below lists major capital expenditures in conjunction with the refurbishment and/or renewal works scheduled for the future(finished in part) on the properties held as of October 31, 2012. The estimated cost of works includes the amount to be charged as“expenses” for accounting purposes.
Name of Property (Location)

Description of Works (Purpose)

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)
NOF Nihonbashi Honcho Bldg.
(Chuo-ku, Tokyo)

From:
To:

Feb. 2011
Mar. 2017

Estimated Cost (¥ mln)
Paid during
Paid before
Total
18th Period
18th Period
460
14(Note 2)

From:
To:

Sep. 2011
Jan. 2013146(Note 2)

85

-

From:
To:

Jan. 2012
Sep. 2013

207(Note 2)

-

-

From:
To:

Jan. 2012
Nov. 2013

247(Note 2)

-

-

From:
To:

Mar. 2012
Apr. 2013

143

47

-

Estimated Period

Renovation of extra-high substation equipment(To increase quality) (Note 1)
Renovation of passenger elevator control system(Low level (4 units for each))(To increase quality) (Note 1)
Renovation of passenger elevator control system(High level (4 units for each))(To increase quality) (Note 1)
Renovation of passenger elevator control system(High level (4 units for each))(To increase quality) (Note 1)
Renewal of cooling water heat pump equipment(To increase quality) (Note 1)

Renovation of passenger elevator control system
From:
Nov.2012
Sapporo North Bldg.
195(To increase quality) (Note 1)
To:
Jan. 2014(Chuo-ku, Sapporo)
Note 1: These works have already been implemented as of the date of this report.
Note 2: As for Shinjuku Nomura Building, the posted amount of cost represents 50.1%, our portion of quasi co-ownership, of the total cost of refurbishment of theentire building.

2. CAPITAL EXPENDITURES DURING THE EIGHTEENTH FISCAL PERIOD
The table below lists capital expenditures during the eighteenth fiscal period in conjunction with the major works of renovation. During theperiod, we have conducted engineering works totalling ¥1,261 million: capital expenditures of ¥827 million and repair expenses of ¥434
million combined all together.
Name of Property (Location)

Description of Works (Purpose)

Period of Works

Cost of Works(¥ mln)Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renovation of passenger elevator control system(Middle level (1 units for each))(To increase quality)

From:
To:

Apr. 2012
Jul. 201267

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renovation of passenger elevator control system(Low level (2 unit))(To increase quality)

From:
To:

May. 2012
Oct. 201274

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renovation of passenger elevator control system(High level (1 unit))(To increase quality)

Shinjuku Nomura Bldg.
(Shinjuku-ku, Tokyo)

Renovation of extra-high substation equipment(To increase quality)

From:
To:
From:
To:

Jan. 2012
Oct. 2012
Aug. 2011
Oct. 2012

NRE Tennozu Bldg.
(Shinagawa-ku, Tokyo)

Renewal of central monitoring and building management systems(To increase quality)

From:
To:

Mar. 2012
Oct. 201258

NOF Nihonbashi Honcho Bldg.
(Chuo-ku, Tokyo)

Renew of cool-water heat source equipment(To increase quality)

From:
To:

May 2012
Oct. 201243

Iwamoto-cho Toyo Bldg.
(Chiyoda-ku, Tokyo)

Dividing construction of air conditioning system(To increase quality)

From:
To:

May 2012
Jul. 2012

48

Sapporo North Bldg.
(Chuo-ku, Sapporo)

Renew of emergency supplies equipment(To increase quality)

Other Properties

Improvement of features

From:
To:
From:
To:

Jul. 2012
Oct. 2012
May. 2012
Oct. 2012

Total

49
76

52
355
827

3. FUNDS RESERVED FOR THE LONG-TERM REPAIR PLANS
Subject to the long-term schedule for repairs and maintenance set down for each building, the Company has accounted for reserves fromthe operating cash flow to prepare for large-scale engineering works to be carried out in the future.

Balance brought forwardfrom the previous period
Amount reserved during
the period
Amount used during theperiodBalance brought forward
to the next period

18th Period
from May 1, 2012
to Oct. 31, 2012

17th Period
from Nov. 1, 2011
to Apr. 30, 2012

16th Period
from May 1, 2011
to Oct. 31, 2011

15th Period
from Nov 1, 2010
to Apr. 30, 2011

14th Period
from May 1, 2010
to Oct. 31, 2010(¥ mln)

1,250

1,087

620

438

397

(¥ mln)

1,616

1,988

1,437

890

900

(¥ mln)

1,049

1,825

970

708

859

(¥ mln)

1,816

1,250

1,087

620

438

17

Expenses and Liabilities
1. EXPENSES RELATED TO ASSET MANAGEMENT.

(¥000)

18th Period
from May 1, 2012
to Oct. 31, 2012
996,041of which

Management Fee I(¥000)

701,638

705,465of which

Management Fee II(¥000)

294,403

296,507of which

Management Fee III(¥000)--

Custodian fees(¥000)

28,662

28,764General administrative fees(¥000)

63,73464,278

Directors’ compensation(¥000)

10,80012,000

Other expenses(¥000)

79,41478,973

Asset management fees (Note)

17th Period
from Nov. 1, 2011
to Apr. 30, 2012
1,001,972

Total(¥000)
1,178,652
1,185,989
Note: In the Asset Management Agreement between the Company and the Asset Management Company, there is no provision for the acquisition fees, which arepayable to the Asset Management Company by the Company on acquisition of a new property, and such fees are non-existent.

18

2. STATUS OF BORROWINGSThe status of borrowings from the financial institutions as of October 31, 2012 is as follows.
Outstanding asof Oct. 31,
2012(¥000)

Outstanding
as of Apr. 30,
2012(¥000)

1,000,000

900,000
500,000
1,000,000
500,000
1,000,000

1,000,000

3,900,000

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

-5,600,000

Sumitomo Mitsui Banking Corp.

-

4,500,000-

1,400,000

Financial Institutions

Sumitomo Trust and Banking Co., Ltd.
The Chiba Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
Aozora Bank, Ltd.
The Chugoku Bank, Ltd.

Date Borrowed

Jun. 24, 2011
Aug. 26, 2011
Dec. 26, 2011

Subtotal

Mitsubishi UFJ Trust and Banking Corp.

Jun. 24, 2009

The Hyakujushi Bank, Ltd.

-

500,000

Taiyo Life Insurance Company-

1,000,000-

1,000,000-

1,000,000-

1,000,000-

1,000,000-

1,000,000-

2,000,000-

1,500,000-

2,500,000

Sumitomo Mitsui Trust Bank, Ltd.

-

1,000,000

The Iyo Bank, Ltd.

-

500,000

Mitsubishi UFJ Trust and Banking Corp.

-

1,000,000-

1,000,000

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

3,000,000

3,000,000

Sumitomo Mitsui Banking Corp.

3,000,000

3,000,000

2,000,000

2,000,000

Sumitomo Mitsui Trust Bank, Ltd.

2,000,000

2,000,000

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2,000,000

2,000,000

2,000,000

2,000,000

1,000,000

1,000,000

Daido Life Insurance Company
Mitsui Life Insurance Co., Ltd.

Nov. 29, 2005

Zenkyoren
Development Bank of Japan, Inc.
Zenkyoren

Dec. 9, 2005

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.

Sumitomo Mitsui Trust Bank, Ltd.

Mitsubishi UFJ Trust and Banking Corp.

Sumitomo Mitsui Banking Corp.

Feb. 26, 2008

Sep. 25, 2008

Nov. 4, 2008

Jun. 27, 2008

The Mizuho Corporate Bank, Ltd.

Average
Interest
Rate (%)(Note 1)

Date of
Repayment

0.73643

Jun. 24, 2012

0.73615

Aug. 26, 2012

0.62833

Dec. 26, 2012

1.39575

Jun. 24, 2012

1.43750

Aug. 26, 2012

1.53625

Aug. 26, 2012

1.46000

Aug. 26, 2012

1.61150

Sep. 25, 2012

1.51175

Nov. 4, 2012

1.87200

Dec. 27, 2012

Mar. 17, 2005

1,000,000

1,000,000

1.75250

Feb. 26, 2013

The Dai-ichi Life Insurance Company, Limited

Dec. 8, 2006

2,000,000

2,000,000

1.99250

Feb. 26, 2013

2,000,000

2,000,000

2,000,000

2,000,000

1.13000

Feb. 26, 2013
Jun. 24, 2013

THE NISHI-NIPPON CITY BANK, LTD.

Mar. 26, 2010

Balloonpayment

Balloonpayment(Note 2)

(Note 2)The Chugoku Bank, Ltd.

Jun. 24, 2010

2,000,000-

1.14050

Mitsui Sumitomo Insurance Co., Ltd.

Dec. 8, 2010

1,000,000-

0.87833

Jun. 24, 2013

The Bank of Fukuoka, Ltd.

Aug. 26, 2010

2,500,000-

0.98550

Aug. 26, 2013

The Chiba Bank, Ltd.

Feb. 27, 2012

500,000-

0.69833

Aug. 27, 2013

The Chiba Bank, Ltd.

Jun. 25, 2012

500,000-

0.65833

Aug. 27, 2013

Development Bank of Japan, Inc.

Jun. 25, 2009

500,000

500,000

1.97000(Note 3)(Note 3)

Subtotal

29,000,000

50,000,000

Total Short-term Borrowings

30,000,000

53,900,000

Outstanding asof Oct. 31,
2012(¥000)

Outstanding
as of Apr. 30,
2012(¥000)

Average
Interest
Rate (%)(Note 1)

Date of
Repayment

Method of
Use ofRepayment Borrowings

Financial Institutions

Date Borrowed

The Chugoku Bank, Ltd.
Mitsui Sumitomo Insurance Co., Ltd.
The Bank of Fukuoka, Ltd.

-2,000,000
1,000,000
2,500,000

1.14050
0.87833
0.98550

Jun. 24, 2013
Jun. 24, 2013
Aug. 26, 2013

The Chiba Bank, Ltd.

Jun. 24, 2010
Dec. 8, 2010
Aug. 26, 2010
Feb. 27, 2012-

500,000

0.69833

Aug. 27, 2013

The Chiba Bank, Ltd.

Jun. 25, 2012

1,000,000
4,500,000
1,000,000
1,000,000

1,000,000
4,500,000
1,000,000
1,000,000

0.65833

Aug. 27, 2013

1.68680

Dec. 8, 2013

1,000,000

1,000,000

500,000
2,000,000
2,000,000

500,000
2,000,000
2,000,000

0.98000

Feb. 26, 2014

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
The Iyo Bank, Ltd.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
The Nomura Trust and Banking Co., Ltd.
Shinkin Central Bank

Dec. 8, 2008

Feb. 28, 2011

19

Note

Unsec
ured/
Uninsured

Unsec
ured/
Uninsured

Development Bank of Japan, Inc.

Mizuho Trust & Banking Co., Ltd.

Method of
Use ofRepayment Borrowings

Balloonpayment
Balloonpayment(Note 2)

Note

Unsec
ured/
UninsuredTaiyo Life Insurance Company
Daido Life Insurance Company
Sumitomo Life Insurance Company

Mar. 19, 2007

1,000,000
1,000,000
2,000,000

1,000,000
1,000,000
2,000,000

1.98000

Mar. 19, 2014

The Hachijuni Bank, Ltd.
The Hiroshima Bank, Ltd.
The Keiyo Bank, Ltd.

Jun. 10, 2011

1,000,000
1,000,000
1,000,000

1,000,000
1,000,000
1,000,000

0.91900

Jun. 10, 2014

The Mizuho Corporate Bank, Ltd.

3,000,000

3,000,000

Sumitomo Mitsui Trust Bank, Ltd.
The Iyo Bank, Ltd.
The Hachijuni Bank, Ltd.

1,000,000
1,000,000
1,000,000

1,000,000
1,000,000
1,000,000

0.83875

Aug. 26, 2014

Sep. 26, 2011

1,000,000
1,000,000

1,000,000
1,000,000

0.82833

Aug. 26, 2014

Aug. 27, 2012

1,000,000-

0.68563

Aug. 26, 2014

1,800,000
2,400,000
500,000
650,000
1,000,000
3,000,000

1.55800

Dec. 24, 2014

Feb. 26, 2008

1,800,000
2,400,000
500,000
650,000
1,000,000
3,000,000

1.91875

Feb. 26, 2015

Feb. 26, 2010

3,000,000

3,000,000

1.69300

Feb. 26, 2015

Taiyo Life Insurance Company
Sumitomo Life Insurance Company
Development Bank of Japan, Inc.

Jun. 24, 2008

1,000,000
3,000,000
4,000,000

1,000,000
3,000,000
4,000,000

2.31750

Jun. 24, 2015

Sompo Japan Insurance Inc.

The Hyakujushi Bank, Ltd.
The 77 Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
The Bank of Fukuoka, Ltd.
The Dai-ichi Life Insurance Company, Limited.
The Norinchukin Bank, Ltd.

Aug. 26, 2011

Dec. 24, 2009

Aug. 26, 2010

1,000,000

1,000,000

1.31125

Aug. 26, 2015

Sumitomo Mitsui Trust Bank, Ltd.
The Nomura Trust and Banking Co., Ltd.
The Hiroshima Bank, Ltd.

Feb. 27, 2012

3,000,000
2,000,000
500,000

3,000,000
2,000,000
500,000

0.90800

Feb. 27, 2016

Mitsubishi UFJ Trust and Banking Corp.
The Chugoku Bank, Ltd.
Resona Bank, Ltd.

Aug. 26, 2011

1,000,000
1,000,000
1,000,000

1,000,000
1,000,000
1,000,000

1.10100

Aug. 26, 2016

1,000,000
1,000,000
500,000
500,000

500,000
500,000

0.79750

Aug. 26, 2016

1.07450

Feb. 26, 2017

Aug. 27, 2012

1,000,000
500,000
500,000-

0.88700

Feb. 26, 2018

Jun. 10, 2011

3,000,000
900,000

3,000,000
900,000

1.43500

Jun. 10, 2017

Feb. 27, 2012

2,000,000
2,000,000
1,000,000
3,000,000
1,000,000

2,000,000
2,000,000
1,000,000
3,000,000
1,000,000

1.12850

Aug. 27, 2017

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.
The Hyakujushi Bank, Ltd.

Jun.25, 2012

5,600,000
4,500,000
1,400,000
900,000
500,000-

1.03775

Dec. 26, 2017

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.
Sumitomo Mitsui Trust Bank, Ltd.
The Iyo Bank, Ltd.
The Bank of Yokohama, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Mizuho Corporate Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Trust Bank, Ltd.
The Iyo Bank, Ltd.

Sep. 25, 2012
Mar. 16, 2012

Feb. 28, 2011

1,000,000

1,000,000

1.84650

Feb. 26, 2018

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corp.
The Mizuho Corporate Bank, Ltd.

Mar. 16, 2012

1,250,000
1,250,000
500,000

1,250,000
1,250,000
500,000

1.44450

Feb. 26, 2019

Sumitomo Mitsui Banking Corp.
Mitsubishi UFJ Trust and Banking Corp.
Aozora Bank, Ltd.

Aug. 27, 2012

1,700,000
3,500,000
500,000-

1.25200

Aug. 26, 2019

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Aug. 27, 2012

2,200,000-

1.22000

Aug. 26, 2019

Taiyo Life Insurance Company
Daido Life Insurance Company
Mitsui Life Insurance Co., Ltd.

Aug. 27, 2012

1,000,000
500,000
1,000,000-

1.27625

Aug. 26, 2019

Development Bank of Japan, Inc.

Aug. 27, 2012

1,100,000-

1.53674

Aug. 26, 2020

Development Bank of Japan, Inc.

Jun. 25, 2009

8,250,000
90,000,000

1.97000(Note 3)

Subtotal

8,000,000
113,150,000

Total

143,150,000

143,900,000

Note 1:

Balloonpayment(Note 2)

Unsec
ured/
Uninsured(Note 3)

The average interest rate is weighted by the balance of each borrowing as at the end of the period and rounded to the nearest fifth decimal place.
As for the borrowings, which were hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest
rates are used to calculate the weighted average of interest.
Note 2: The use of borrowings is to purchase property-related assets, the related miscellaneous expenses and the repayment of borrowings.
Note 3: Instalments of ¥250 million will be made on the 25th of every sixth month starting on December 25, 2009, with the remaining payment of ¥6,750
million to be repaid on June 25, 2016.

20

3. STATUS OF INVESTMENT CORPORATION BONDS
The status of investment corporation bonds issued as of October 31, 2012 is as follows.
Name of Bonds
First Series Unsecured
Investment Corporation Bonds
Second Series Unsecured
Investment Corporation Bonds
Fourth Series Unsecured
Investment Corporation Bonds
Sixth Series Unsecured
Investment Corporation Bonds
Seventh Series Unsecured
Investment Corporation Bonds
Eighth Series Unsecured
Investment Corporation Bonds
Ninth Series Unsecured
Investment Corporation Bonds
Total
Note 1:
Note 2:
Note 3:

Balance as ofOct. 31, 2012(¥ mln)Balance as ofApr. 30, 2012(¥ mln)Interest
Rate(%)

Maturity Date

Mar. 16, 2005

5,000

5,000

1.85

Mar. 16, 2015

Mar. 16, 2005

5,000

5,000

2.47

Mar. 16, 2020

Nov. 28, 2005

10,00010,0002.05

Nov. 30, 2015

Mar. 19, 2007

5,000

5,000

2.21

Mar. 17, 2017

Mar. 19, 2007

4,500

4,500

2.90

Mar. 17, 2028

Nov. 26, 2010

6,000

6,000

0.94

Nov. 26, 2014

Nov. 26, 2010

4,000

4,000

1.52

Nov. 24, 2017

39,50039,500Issue Date

Method of
Repayment

Use ofProceeds

Note(Note 2)

Balloonpayment

The uses of proceeds are to purchase the property-related assets, pay for the costs, and to repay borrowings.
Ranking Pari Passu among the investment corporation bonds for qualified institutional investors only.
Ranking Pari Passu among the specified investment corporation bonds.

4. STATUS OF SHORT-TERM INVESTMENT CORPORATION BONDS
There are no outstanding short-term investment corporation bonds as of the end of the eighteenth fiscal period.

21(Note 1)
(Note 3)

Trading during the Eighteenth fiscal period
1. STATUS OF REAL ESTATES AND ASSET-BACKED SECURITIES TRADING
Not applicable.

2. STATUS OF OTHER ASSETS
Not applicable. In addition, the Company’s assets other than the above mentioned properties and asset-backed securities are mostly
comprised of direct bank deposits and bank deposits in trust.

3. PRICE INVESTIGATION(1) Real Estates
Not applicable.

(2) Others
With regard to the properties the Company has traded but not included in the above table “(1) Real Estates,” the price investigation
procedures were conducted by Akira Sugai C.P.A. Office subject to the requirement by Article 201 of the Investment Trust Act.
For the eighteenth fiscal period (from May 1, 2012 to October 31, 2012), four OTC derivatives transactions were subject toinvestigation. Akira Sugai C.P.A. Office was requested to investigate the details of these transactions including the name of counterparty,
issues, the number of execution, financial instruments/monetary indicators, put/call options, exercise prices, the period of execution ofright, the trading period, etc. The investigation report has been received.
4. TRANSACTIONS WITH RELATED PARTIES AND MAJOR SHAREHOLDERS(1) Transactions
Not applicable.
(2) Fees Paid to Related Parties and Major Shareholders
Table of fees paid to related parties and major shareholders during the eighteenth fiscal period is as follows.

Contract-out fees
Property management fees
Other expenses

Name of Related Party and Major Shareholders

Amount Paid (A)(¥000)

Total Amount Paid (B)(¥000)

Nomura Building Management Co., Ltd. (Note 2)
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.

756,730
171,257
21,841
24,51133,585

1,152,050
252,464
72,433

Portion(A) / (B)
(%)
65.7
67.8
8.7
33.8
46.4

Note 1: The term “related parties” refers to related parties of Asset Management Companies as stipulated by Article 123 of the Enforcement Order of the Act on Investment
Trusts and Investment Corporations and by Article 26, Paragraph 1, Item 27 of the Regulations Concerning Investment Reports of Investment Trusts and Investment
Corporations, issued by The Investment Trusts Association, Japan. The term “major shareholders” refers to major shareholders of Asset Management Companies as
defined by Article 29-4, Paragraph 2 of the Financial Instruments and Exchange Act.
Note 2: In addition to the Property Management Agreement, the Company has entrusted Nomura Building Management Co., Ltd. with daily m aintenance of building andequipments, the cost of which is included in “Contract-out Fees”.
Note 3: Besides the above, the Company has made the following payments for repair works during the eighteenth fiscal period.
Name of Related Party
Amount Paid (¥000)
Nomura Real Estate Development Co., Ltd.
23,837
Nomura Building Management Co., Ltd.
449,933

22

The management fees paid to the property management companies, which are related parties, are broken down as follows.
Name of Property

Property Management Company

Shinjuku Nomura Bldg.
NRE Tennozu Bldg.
Tennozu Park Side Bldg.
NOF Shibuya Koen-dori Bldg.
Secom Medical Bldg.
Nishi-Shinjuku Showa Bldg.
NRE Shibuya Dogenzaka Bldg.
NOF Tameike Bldg.
NOF Shinagawa Konan Bldg.
NOF Surugadai Plaza Bldg.
PMO Nihonbashi Honcho
NRE Higashi-nihonbashi Bldg.
PMO Akihabara
Hatchobori NF Bldg.
PMO Hatchobori
NOF Minami-Shinjuku Bldg.
PMO Higashi-nihonbashi
NRE Ueno Bldg.
NOF Technoport Kamata Center Bldg.
NOF Kichijoji Honcho Bldg.
Faret Tachikawa Center Square
NOF Yokohama Nishiguchi Bldg.
NOF Shin-Yokohama Bldg.
NRE Sapporo Bldg.
Omron Kyoto Center Bldg.
NRE Osaka Bldg.
NRE Nishi-Umeda Bldg.
NRE Yotsubashi Bldg.
NOF Shinjuku Minamiguchi Bldg.
NOF Takanawa Bldg.
Central Shintomicho Bldg.
Toshin Meguro Bldg.
NOF Kawasaki Higashiguchi Bldg.
NOF Utsunomiya Bldg.
NOF Nagoya Yanagibashi Bldg.
NRE Hiroshima Bldg.

Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd..
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.
Nomura Building Management Co., Ltd.

Property Management Fees(¥000)(Note 1) (Note2)
33,346
16,43812,552
5,429
3,789
5,298
3,465
4,146
3,715
5,248
2,598
3,615
2,818
2,139
2,152
1,957
1,417
4,983
7,632
2,037
4,631
4,686
4,222
4,133
5,535
11,624
3,434
8,205
3,848
2,111
980
635
5,374
4,068
2,354
2,467

Note 1: “Property Management Fees” are the aggregated sum of the basic fee and the incentive fee.
Note 2: Daily maintenance of building and equipments is entrusted to Nomura Building Management, but the fees associated with such works are not included here.

5. STATUS OF BUSINESS WITH THE ASSET MANAGEMENT COMPANY OVER ITS SUBSIDIARY BUSINESS
Although Nomura Real Estate Asset Management Co., Ltd., the asset management company of the Company, conducts subsidiarybusiness of Type II Financial Instruments Business, and Building Lots and Buildings Transaction Business, there is no relevant matter
under this subject as of October 31, 2012.

Other Information
1. NOTICE
Not applicable.
2. STATUS OF BENEFICIAL INTEREST IN INVESTMENT TRUSTS ESTABLISHED BY THE COMPANY
Not applicable.
3. OTHER MATTERS
For the purpose of this report, the numbers of amount below unit are truncated and the numbers in percentage are rounded to unit unlessotherwise mentioned specifically.

23

Financial Section

Contents
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Flows
Notes to Financial Statements

25
27
28
29
30

24

Balance Sheet
Thousands of Yen
As of October 31, 2012

As of April 30, 2012ASSETS
Current Assets:
Cash and bank deposits¥27,358,705¥26,692,688

259,985

220,998-

157,795

461,938

413,290

28,080,628

27,484,771

Land

263,467,281

263,467,281

Buildings and structures

127,308,207

126,559,598

Machinery and equipment

1,648,920

1,643,355

Tools, furniture and fixtures

316,161

303,871

Leased assets

33,95630,947

Construction in progress

43,68846,575392,818,213

392,051,627(26,098,111)(24,463,985)

366,720,102

367,587,642

Leasehold rights

1,900,905

1,900,905

Intangible assets

1,301

1,565

Long-term prepaid expenses

165,815

176,609

Security deposits

410,850

410,850

Deferred investment corporation bond issuance costs

95,439105,248

2,574,310

2,595,177¥397,375,040¥397,667,590

Rental receivables
Consumption taxes receivable
Other current assets
Total current assets

Property and Equipment, at Cost:

SubtotalLess accumulated depreciation
Net property and equipment

Investments and Other Assets:

Total investments and other assets

Total Assets
The accompanying notes to financial statements are an integral part of these statements.

25

Thousands of Yen
As of October 31, 2012

As of April 30, 2012

LIABILITIESCurrent Liabilities:
Trade accounts payable¥1,070,696¥636,473

Other accounts payable

1,000,117

998,833

Short-term debt

1,000,000

3,900,000

Current portion of long-term debt

29,000,000

50,000,000

712,135

759,986

193

304

Accrued consumption taxes

242,667-

Rent received in advance

1,874,9781,894,409

Other current liabilities

65,77187,42634,966,557

58,277,431

Investment corporation bonds

39,500,000

39,500,000

Long-term debt

113,150,000

90,000,000

Security deposits from tenants

20,285,258

20,431,037

4,787

1,105

Total long-term liabilities

172,940,045

149,932,142

Total Liabilities

207,906,602

208,209,573

185,455,447

185,455,447

100,000

100,000

Retained earnings

3,912,991

3,902,570

Total surplus

4,012,991

4,002,570

Total unitholders’ equity

189,468,438

189,458,017

Total Net Assets

189,468,438

189,458,017

Total Liabilities and Net Assets¥397,375,040¥397,667,590

Accrued expenses
Accrued income taxes

Total current liabilities

Long-term Liabilities:

Other long-term liabilities

NET ASSETS
Unitholders’ Equity:
Unitholders’ capital
Surplus
Voluntary reserve
Reserve for reduction entry

The accompanying notes to financial statements are an integral part of these statements.

26

Statement of Income and Retained Earnings
Thousands of Yen
For the period
from May 1, 2012
to October 31, 2012

For the period
from November 1, 2011
to April 30, 2012

Operating Revenues and Expenses
Operating Revenues:
Real estate rental revenues
Operating Expenses:
Real estate rental expenses
Asset management fees
Administrative service and custodian fees
Other operating expenses
Operating Profit¥12,701,686¥12,441,505

12,701,686

12,441,505

6,040,301

5,726,470

996,041

1,001,973

92,39793,04390,214

90,973

7,218,953

6,912,459

5,482,733

5,529,046

2,610

3,091

39,35554,631

41,96557,722

1,023,649
119,494

1,044,038
121,780

392,066

419,020

Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues
Non-Operating Expenses:
Interest expense
Loan arrangement fees
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance
Other non-operating expenses
costs

9,809

12,65565,72285,9391,610,740

1,683,432

Ordinary Income

3,913,958

3,903,336

Income before Income Taxes

3,913,958

3,903,336

1,004

922

10

3

3,912,944

3,902,411

47

159¥3,912,991¥3,902,570

Income Taxes:
Current
Deferred
Net Income
Retained earnings brought forward
Retained Earnings at End of Period
The accompanying notes to financial statements are an integral part of these statements.

27

Statement of Changes in Net Assets
For the period from May 1, 2012 to October 31, 2012
Thousands of Yen

Unitholders’ Equity
Surplus
Voluntary
Reserve

Unitholders’CapitalUnits

Retained
Earnings

Reserve for
Reduction
Entry

Total Surplus

Total Unitholders’EquityTotal
Net Assets

Balance as of April 30, 2012

305,123¥185,455,447¥100,000 ¥3,902,570¥4,002,570¥189,458,017¥189,458,017

Cash distribution paid--

- (3,902,523)(3,902,523)(3,902,523)(3,902,523)

Net income

-

-

-

3,912,944

3,912,944

3,912,944

3,912,944

305,123¥185,455,447¥100,000 ¥3,912,991¥4,012,991¥189,468,438¥189,468,438

Balance as of October 31, 2012

For the period from November 1, 2011 to April 30, 2012
Thousands of Yen

Unitholders’ Equity
Surplus
Unitholders’CapitalUnits

Balance as of October 31, 2011

Voluntary
Reserve

Total Unitholders’EquityTotal
Net Assets

Retained
Earnings

Total Surplus¥4,627,269¥4,627,269¥190,082,716¥190,082,716- (4,527,110)(4,527,110)(4,527,110)(4,527,110)

Reserve for
Reduction
Entry

305,123¥185,455,447

Cash distribution paid--

Provision of reserve for
reduction entry--

100,000(100,000)---

Net income

-

-

-

3,902,411

3,902,411

3,902,411

3,902,411

305,123¥185,455,447¥100,000 ¥3,902,570¥4,002,570¥189,458,017¥189,458,017

Balance as of April 30, 2012-

The accompanying notes to financial statements are an integral part of these statements.

28

Statement of Cash Flows
Thousands of Yen
For the period
from May 1, 2012
to October 31, 2012

For the period
from November 1, 2011
to April 30, 2012

Cash Flows
Cash Flows from Operating Activities
Income before income taxes¥3,913,958¥3,903,336

Depreciation

1,669,892

1,717,655

Amortization of long-term prepaid expenses

10,73910,426

Amortization of investment corporation bonds issuance costs

9,809

12,655-(1,540)(Decrease) in provision for loss on disaster
Interest income(2,610)(3,091)

Interest expense

1,415,714

1,463,058

Loss on disposal of property and equipment

2,600

2,707

(Increase) Decrease in rental receivables(38,987)

321,062

Decrease (Increase) in consumption taxes receivable

157,795(157,795)

Increase (Decrease) in trade accounts payable

434,223(391,833)(Decrease) in other accounts payable(40,103)(256,954)

Increase (Decrease) in accrued consumption taxes

242,667(215,643)(Decrease) Increase in rent received in advance(19,430)

29,664

Changes in other current assets/liabilities
SubtotalInterest received
Interest paid
Income taxes paid

(75,615)(27,767)

7,680,652

6,405,940

2,610

3,091

(1,457,936)(1,494,038)(1,115)(914)

6,224,211

4,914,079

Payments for purchases of property and equipment(762,495)(9,085,648)

Reimbursement of security deposits to tenants(417,927)(734,341)

Proceeds from security deposits from tenants

272,148

1,054,787

Net cash used in investing activities(908,274)(8,765,202)

Proceeds from short-term debt-

1,000,000

Repayment of short-term debt

(2,900,000)(5,000,000)

Proceeds from long-term debt

29,900,000

19,000,000

Repayment of long-term debt

(27,750,000)(11,250,000)-(5,000,000)(3,899,920)(4,523,856)(4,649,920)(5,773,856)

Net cash provided by operating activities

Cash Flows from Investing Activities

Cash Flows from Financing Activities

Redemption of investment corporation bonds
Distributions to unitholders
Net cash used in financing activities
Net Increase (Decrease) in Cash and Cash Equivalents

666,017(9,624,979)

Cash and Cash Equivalents at Beginning of Period

26,692,688

36,317,667

Cash and Cash Equivalents at End of Period¥27,358,705¥26,692,688

The accompanying notes to financial statements are an integral part of these statements

29

Notes to Financial Statements
1.

ORGANIZATION
Nomura Real Estate Office Fund, Inc. (the “Company”) is a real estate investment corporation formed to own and invest primarily in
office properties. The Company is externally managed by a licensed asset management company, Nomura Real Estate AssetManagement Co., Ltd. (“NREAM”). NREAM is a wholly-owned subsidiary of Nomura Real Estate Holdings, Inc.
On August 7, 2003, the Company was incorporated under the Act on Investment Trusts and Investment Corporations (the“Investment Trust Act”) of Japan. On December 4, 2003, the Company was listed on the Tokyo Stock Exchange as the 9th J-REIT
and started operations on the following day. As of October 31, 2012, the Company owned a portfolio of 51 office properties
containing an aggregate of approximately 406,636.34 square meters of leasable area and leased office space to 793 tenants.

2.

BASIS OF PRESENTATIONThe Company maintains its accounting records and prepares its financial statements in accordance with accounting principles
generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Financial Instruments and Exchange Act ofJapan, the Investment Trust Act of Japan and related regulations, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been ma de to
the financial statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In
addition, the notes to financial statements include certain information that might not be required under Japanese GAAP but ispresented herein as additional information. Amounts have been rounded to the nearest thousand of yen in the accompanying
financial statements and the notes thereto, whereas amounts were truncated in the Japanese financial statements prepared inaccordance with Japanese GAAP.
The Company’s fiscal period is a six-month period which ends at the end of April or October. The Company does not prepare
consolidated financial statements because it has no subsidiaries.

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments that are highly liquid,readily convertible to cash, with an insignificant risk of market value fluctuation, and with a maturity of three months or less whenpurchased.

Property and equipment (Except for leased assets)
Property and equipment are stated at cost, which includes the purchase price and related costs for acquisition, less accumulated
depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the fixed assets outlined
below:
Buildings
Structures
Machinery and equipment
Tools, furniture and fixtures

3 - 70 years
2 - 45 years
3 - 15 years
2 - 18 years

Intangible assets (Except for leased assets)
Intangible assets are amortized by the straight-line method.

Leased assets
Depreciation of leased assets under finance lease transactions, excluding those in which the ownership of the leased assets is deemed
to be transferred to the lessee, is calculated by the straight-line method, over the lease term with no residual value.

Impairment of fixed assets
The Company reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying value of
its fixed assets may not be recoverable. An impairment loss is recognized if the carrying value of an asset exceeds the aggregate
estimated future cash flows. If a fixed asset is determined to be impaired, it is written down to its recoverable amount and thewrite-down is recorded as an impairment loss during the period in which it occurs. No impairment losses have been recognized todate.

Deferred investment corporation bond issuance costs
Deferred investment corporation bond issuance costs are amortized by the straight-line method over the respective terms of thebonds.

30

Accounting treatment of beneficial interests in real estate
All assets and liabilities held in trust, for which the real estate in possession of the Company was entrusted, and all related earnings
and expenses incurred are reflected in the accompanying balance sheet and statement of income and retained earnings, respectively.

Revenue recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues including
utility charge reimbursements, parking space rental revenues and other income. Rental revenues are generally recognized on an
accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts arereasonably estimated.

Property related taxes
Property in Japan is subject to property, urban planning and depreciable asset taxes on a calendar year basis. The taxes related toproperty are generally imposed based on the value of the relevant property and incurred for fiscal period.
The seller of a property is liable for property related taxes for the period from the purchase date through the end of that calendar year
because taxes are imposed on the owner registered in the record as of January 1 for the entire year based on the assessment made by
the local government. The amount applicable to the buyer of a property is usually settled between each party and capitalized as partof the acquisition cost of the property. No capitalized property related taxes were incurred for the six-month period ended October 31,
2012 as the Company did not acquire any properties. The capitalized property related taxes amounted to ¥18,835 thousand for thesix-month period ended April 30, 2012.

Income taxes
Deferred tax assets and liabilities are computed based on the differences between the financial statements and income tax bases ofassets and liabilities using the applicable statutory tax rates.

Consumption taxes
Consumption taxes received and paid are not included in the accompanying statement of income and retained earnings.

Derivative financial instruments
The Company utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure tochanges in interest rates. The Company defers recognition of gains or losses resulting from changes in the fair value of interest-rate
swap contracts which meet the criteria for deferred hedge accounting.
Although the deferred hedge treatment is generally applied, the Company applies special treatment to those interest -rate swap
contracts that meet the criteria for such special treatment. Under the special treatment, interest-rate swaps are not remeasured at fairvalue; instead, the net amount paid or received under the interest rate swap contract is recognized and included in interest expense or
income.

4.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents as of October 31, 2012 and April 30, 2012 consist of the following:Thousands of Yen
As of October 31, 2012

As of April 30, 2012

Cash and bank deposits¥27,358,705¥26,692,668

Cash and cash equivalents¥27,358,705¥26,692,668

31

5.

SCHEDULE OF PROPERTY AND EQUIPMENT
Property and equipment as of April 30, 2012 and October 31, 2011 consist of the following:Thousands of Yen
As of October 31, 2012Land
Buildings and structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Construction in progress
Land in trust
Buildings and structures in trust
Accumulated depreciation
Machinery and equipment in trust
Accumulated depreciation
Tools, furniture and fixtures in trust
Accumulated depreciation
Leased assets in trust
Accumulated depreciation
Construction in progress in trust
Total

6.

Acquisition costs¥ 61,683,840
31,189,897(3,923,421)
696,224(205,411)
16,521(6,016)
201,783,441
96,118,310(21,199,042)
952,696(576,401)
299,640(161,938)
33,956(25,882)
43,688¥ 366,720,102

As of April 30, 2012

Book value¥ 61,683,840
27,266,476
490,813
10,505201,783,441
74,919,268
376,295
137,702
8,074
43,688¥ 366,720,102

Acquisition costs¥ 61,683,840
31,128,337(3,545,375)
696,224(183,693)
15,727(5,045)201,783,441
95,431,261(20,009,206)
947,131(546,525)
288,144(147,857)
30,947(26,284)
46,575¥367,587,642

Book value¥ 61,683,840
27,582,962
512,531
10,682201,783,441
75,422,055
400,606
140,287
4,663
46,575¥367,587,642

SHORT-TERM DEBT
Short-term debt as of April 30, 2012 and October 31, 2011 consist of the following:Thousands of Yen
As of October 31, 2012
Weighted-averageinterest rate
Amount(Note 1)0.73643%

Unsecured loans from banks due on June 24, 2012

As of April 30, 2012
Weighted-averageinterest rate
Amount(Note 1)
¥1,000,000
0.73643%

Unsecured loans from banks due on June 24, 2012-

1.39575%

4,000,000

0.78643%

Unsecured loans principally from insurance companies due on August 26,
2012
Unsecured loans from banks due on August 26, 2012-

1.43750%

11,000,000

1.89764%-0.73615%

1,400,000

0.73643%

Unsecured loans from a financial institution due on August 26, 2012-

1.53625%

12,000,000

1.39575%

Unsecured loans from banks due on August 26, 2012-

1.46000%

5,000,000

1.43750%

Unsecured loans from banks due on September 25, 2012-

1.61150%

1,500,000

0.73643%

Unsecured loans from banks due on November 4, 2012

¥10,000,000

1.51175%

1,000,000

1.53625%

Unsecured loans from a bank due on December 26, 2012

1,000,000

0.62833%

7,500,000

1.46000%

Unsecured loans from banks due on December 27, 2012

5,000,000

1.87200%

2,000,000

1.61150%

Unsecured loans from a bank due on February 26, 2013

1,000,000

1.75250%--

Unsecured loans from an insurance company due on February 26, 2013

2,000,000

1.99250%--

Unsecured loans from banks due on February 26, 2013

4,000,000

1.13000%--

Unsecured loans from a bank due on June 24, 2013

2,000,000

1.14050%--

Unsecured loans from an insurance company due on June 24, 2013

1,000,000

0.87833%--

Unsecured loans from a bank due on August 26, 2013

2,500,000

0.98550%--

Unsecured loans from a bank due on August 27, 2013

500,000

0.69833%

500,000

1.97000%

Unsecured loans from a bank due on August 27, 2013
500,000
0.65833%¥46,900,000
Note 1: The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth
decimal place. As for the borrowings, which were hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, theswapped interest rates are used to calculate the weighted average of interest.
Note 2: Installments of ¥250 million will be made on the 25th day of every sixth month starting on December 25, 2009, with the remaining paymentof ¥6,750 million to be repaid on June 25, 2016.

The Company entered into ¥30,000 million and ¥40,000 million credit facilities in the form of commitment lines with five financial
institutions for the six-month periods ended October 31, 2012 and April 30, 2012, respectively. The total unused amounts of suchcredit facilities were ¥30,000 million as of October 31, 2012 and ¥40,000 million as of April 30, 2012.

32

7.

LONG-TERM DEBT
Long-term debt as of October 31, 2012 and April 30, 2012 consist of the following:
As of October 31, 2012

As of April 30, 2012

(Thousands of Yen)

Weighted-averageinterest rate

Unsecured loans from a bank due on June 24, 2013-

1.14050%¥2,000,000

1.14050%

Unsecured loans from an insurance company due on June 24, 2013-

0.87833%

1,000,000

0.88643%

Unsecured loans from a bank due on August 26, 2013-

0.98550%

2,500,000

0.98550%

Unsecured loans from a bank due on August 27, 2013-

0.69833%

500,000

0.70643%

Unsecured loans from a bank due on August 27, 2013-

0.65833%--

Unsecured loans from banks due on December 8, 2013

¥7,500,000

1.68680%

7,500,000

1.68680%
0.99071%

Amount(Note 1)

Weighted-averageinterest rate

Amount(Thousands of
Yen)(Note 1)

Unsecured loans principally from banks due on February 26, 2014

5,500,000

0.98000%

5,500,000

Unsecured loans from insurance companies due on March 19, 2014

4,000,000

1.98000%

4,000,000

1.98000%

Unsecured loans from banks due on June 10, 2014

3,000,000

0.91900%

3,000,000

0.91900%

Unsecured loans from banks due on August 26, 2014

6,000,000

0.83875%

6,000,000

0.83875%

Unsecured loans from banks due on August 26, 2014

2,000,000

0.82833%

2,000,000

0.83643%

Unsecured loans from a bank due on August 26, 2014

1,000,000

0.68563%--

Unsecured loans from banks due on December 24, 2014

6,350,000

1.55800%

6,350,000

1.55800%

Unsecured loans from an insurance company due on February 26, 2015

3,000,000

1.91875%

3,000,000

1.91875%

Unsecured loans from a financial institution due on February 26, 2015

3,000,000

1.69300%

3,000,000

1.69300%

Unsecured loans principally from insurance companies due on June 24, 2015

8,000,000

2.31750%

8,000,000

2.31750%

Unsecured loans from an insurance company due on August 26, 2015

1,000,000

1.31125%

1,000,000

1.31125%

Unsecured loans from banks due on February 27, 2016

5,500,000

0.90800%

5,500,000

0.90800%

Unsecured loans from banks due on August 26, 2016

3,000,000

1.10100%

3,000,000

1.10100%
1.07450%

Unsecured loans from banks due on August 26, 2016

2,000,000

0.79750%-

Unsecured loans from banks due on February 26, 2017

1,000,000

1.07450%

1,000,000

Unsecured loans from banks due on February 26, 2017

2,000,000

0.88700%--

Unsecured loans from banks due on June 10, 2017

3,900,000

1.43500%

3,900,000

1.43500%

Unsecured loans from banks due on August 27, 2017

9,000,000

1.12850%

9,000,000

1.12850%

Unsecured loans from banks due on December 26, 201712,900,000

1.03775%--

Unsecured loans from a bank due on February 26, 2018

1,000,000

1.84650%

1,000,000

1.84650%

Unsecured loans from banks due on February 26, 2019

3,000,000

1.44450%

3,000,000

1.44450%

Unsecured loans from banks due on August 26, 2019

5,700,000

1.25200%--

Unsecured loans from a bank due on August 26, 2019

2,200,000

1.22000%-

Unsecured loans from insurance companies due on August 26, 20192,500,000

1.27625%-

Unsecured loans from a bank due on August 26, 2020

1,100,000

1.53674%--

Unsecured loans from a bank due on June 25, 2016 (Note 2)

8,000,000

1.97000%

8,250,000

1.97000%

Total¥90,000,000¥113,150,000

Note 1: The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth
decimal place. As for the borrowings, which were hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk,
the swapped interest rates are used to calculate the weighted average of interest.
Note 2: Installments of ¥250 million will be made on the 25th of every sixth month starting on December 25, 2009, with the remaining paymentof ¥6,750 million to be repaid on June 25, 2016.

The scheduled repayment amounts of long-term debt for each of the five years after the balance sheet date (excluding the current
portion of long-term debt) are as follows.
Thousands of Yen

Long-term debt

1-2 years

2-3 years

3-4 years

4-5 years

29,500,000

21,850,000

17,500,000

15,900,000

33

8.

INVESTMENT CORPORATION BONDS
Investment Corporation Bonds
Details of investment corporation bonds outstanding are summarized as follows:
As of April 30, 2012
As of October 31, 2012
AmountWeighted- averageAmountWeighted- average(Thousands of Yen)
interest rate
(Thousands of Yen)
interest rate
First Series of Unsecured Investment Corporation Bonds
Due on March 16, 2015
Second Series of Unsecured Investment Corporation Bonds
Due on March 16, 2020
Fourth Series of Unsecured Investment Corporation Bonds
Due on November 30, 2015
Sixth Series of Unsecured Investment Corporation Bonds
Due on March 17, 2017
Seventh Series of Unsecured Investment Corporation Bonds
Due on March 17, 2028
Eighth Series of Unsecured Investment Corporation Bonds
Due on November 26, 2014
Ninth Series of Unsecured Investment Corporation Bonds
Due on November 24, 2017
Total

¥5,000,000

1.85000%¥5,000,000

1.85000%

5,000,000

2.47000%

5,000,000

2.47000%

10,000,000

2.05000%

10,000,000

2.05000%

5,000,000

2.21000%

5,000,000

2.21000%

4,500,000

2.90000%

4,500,000

2.90000%

6,000,000

0.94000%

6,000,000

0.94000%

4,000,000

1.52000%

4,000,000

1.52000%¥39,500,000¥39,500,000

The scheduled redemption amounts of investment corporation bonds for each of the five years after the balance sheet date are as follows.
Within a year

1-2 years

2-3 years

3-4 years

Thousands of Yen
4-5 years－－

11,000,000

10,000,000

5,000,000

Investment Corporation Bonds

9.

UNITHOLDERS’ EQUITYThe Company issues only non-par value investment units in accordance with the Investment Trust Act. The entire amount of theissue price of new units is designated as stated capital. The Company is required to maintain net assets of at least ¥50,000 thousandas set forth in the Investment Trust Act.

10. PER UNIT INFORMATIONThe net asset values per unit and the net income per unit as of October 31, 2012 and April 30, 2012 were as follows:

Net asset values per unit
Net income per unit

For the period
from May 1, 2012
to October 31, 2012
¥620,958

For the period
from November 1, 2011
to April 30, 2012
¥620,923¥12,824¥12,789

The net income per unit is calculated by dividing net income by the weighted-average number of units outstanding for the respective
six-month period.
Note: The basis for calculating net income per unit is as follows.
For the period
from May 1, 2012
to October 31, 2012
¥3,912,944

Net income (Thousands of Yen)

For the period
from November 1, 2011
to April 30, 2012
¥3,902,411

Amount not available to ordinary unitholders (Thousands of Yen)--

Net income available to ordinary unitholders (Thousands of Yen)

¥3,912,944¥3,902,411

305,123

305,123

Average number of units during the period

11. RELATED PARTY TRANSACTIONS
For the periods from May 1, 2012 to October 31, 2012 and from November 1, 2011 to April 30, 2012
Parent Company and major corporate unitholders
Not applicable
Subsidiaries and affiliates
Not applicable
Fellow subsidiary companies
Not applicable
Directors and major individual unitholders
Not applicable34

12. INCOME TAXESThe Company, as an investment corporation, is subject to corporate income taxes at a statutory tax rate of approximately 40% for thesix-month periods ended October 31, 2012 and April 30, 2012. However, the Company may deduct dividend distributions paid to its
unitholders from its taxable income amounts, provided such distributions meet the requirements under the Act on Special Measures
Concerning Taxation of Japan. Under this act, an investment corporation must meet a number of tax requirements, including arequirement to distribute in excess of 90% of its distributable income for the fiscal period, in order to deduct such amounts. If theinvestment corporation does not satisfy all of the requirements, the entire taxable income of the investment corporation will be subject
to regular corporate income taxes.
Since the Company distributed in excess of 90% of its distributable income in the form of cash distributions totaling¥3,912,897 thousand and ¥3,902,523 thousand for the six-month periods ended October 31, 2012 and April 30, 2012, respectively,
such distributions were treated as deductible distributions for purposes of corporate income taxes. The following summarizes thesignificant differences between the statutory tax rate and the effective tax rate:
For the period
from May 1, 2012
to October 31, 201236.59%(36.58)0.02
0.03%

Statutory tax rate
Deductible cash distributions
Other
Effective tax rate

For the period
from November 1, 2011
to April 30, 201239.33%(39.32)0.01
0.02%

13. FINANCIAL INSTRUMENTS
Overview(1) Policy for Financial Instruments
Upon acquisition of property-related assets, the Company may raise funds through certain financing methods including borrowings,
issuance of investment corporation bonds including short-term investment corporation bonds (“investment corporation bonds”), andissuance of investment units. In financing through interest-bearing debt, to secure stable financing capability and reduce future risksof rising interest rates, the Company’s investment policy is to secure longer-term, fixed-rate borrowings with well-diversified
maturities.
The Company enters into derivative transactions only for the purpose of reducing risk of future interest rate fluctuations anddoes not engage in speculative transactions.
(2) Type and Risk of Financial Instruments and Related Risk Management
Debts and investment corporation bonds are primarily used to fund the acquisition of property-related assets as well as the repayment
of debts and redemption of investment corporation bonds. The Company is exposed to liquidity risk of being unable to meet its
obligations on scheduled due dates. The Company controls and limits such risk by diversifying not only the financial institutions,but also the type of financing to include the effective use of surplus funds and direct financing from the capital markets such as
issuance of investment units. In addition, the Company is exposed to the market risk arising from fluctuations in interest rates on its
floating-rate debts. However, the effect of such risk on the operation of the Company is limited by maintaining the LTV ratio at low
levels and the ratio of long-term fixed-rate debts to total debt at high levels. Furthermore, the Company may utilize derivativetransactions (interest-rate swap transactions) as a hedging instrument to reduce the market risk under floating-rate debts by swapping
such floating-rate interest payments for fixed-rate interest payments.
Bank deposits are held as a means of investing surplus funds, and the Company is exposed to the credit risk that financial
institutions may default. However, the effect of such risk is limited by diversifying the financial institutions with which surplus
funds are deposited.
Security deposits represent funds deposited by tenants, and the Company is exposed to the risk of returning deposits in theevent that a tenant terminates the lease contract. However, the effect of such risk is limited by reserving sufficient funds to allow the
Company to meet the obligation to return such deposits.
(3) Supplementary Explanation on Estimated Fair Value of Financial Instruments
The fair value of financial instruments is based on the quoted market price, if applicable. When there is no quoted market priceavailable, fair value is reasonably estimated. Certain assumptions are used for the estimation of fair value. Accordingly, the resultof such estimation may change if different assumptions are used. Furthermore, the contractual amounts of derivative transacti ons
stated in “18. Derivatives and Hedge Accounting” below do not represent the market risk involved in these derivative transactions.

35Fair Value of Financial Instruments
For the period from May 1, 2012 to October 31, 2012
The following table summarizes the carrying value and the estimated fair values of financial instruments as of October 31, 2012.
The following table does not include financial instruments whose fair value is extremely difficult to estimate (see Note 3 below).
(i)
(ii)

Carrying value (Note 1)
10,907,460
16,451,245
27,358,705(1,000,000)(29,000,000)(39,500,000)(113,150,000)(182,650,000)-

Cash and bank deposits
Cash and bank deposits in trust
Total assets
Short-term debt
Current portion of long-term debt
Investment corporation bonds
Long-term debt
Total liabilities
Derivative transactions

(iii)
(iv)
(v)
(vi)
(vii)

Fair value (Note 1)
10,907,460
16,451,245
27,358,705(1,000,000)(29,042,263)(40,825,166)(114,805,812)(185,673,241)-

Thousands of Yen
Difference
42,263
1,325,166
1,655,812
3,023,241-

For the period from November 1, 2011 to April 30, 2012
The following table summarizes the carrying value and the estimated fair values of financial instruments as of April 30, 2012. The
following table does not include financial instruments whose fair value is extremely difficult to estimate (see Note 3 below).
Carrying value (Note 1)
10,226,773
16,465,915
26,692,688(3,900,000)(50,000,000)(39,500,000)(90,000,000)(183,400,000)
-

(i)
(ii)

Cash and bank deposits
Cash and bank deposits in trust
Total assets(iii) Short-term debt(iv) Current portion of long-term debt(v)
Investment corporation bonds(vi) Long-term debt
Total liabilities(vii) Derivative transactions

Fair value (Note 1)
10,226,773
16,465,915
26,692,688(3,900,000)(50,138,578)(40,546,695)(91,339,461)(185,924,734)-

Thousands of Yen
Difference
138,578
1,046,695
1,339,461
2,524,734-

Note 1: The numbers in parenthesis indicate liabilities.
Note 2: Method for determining the fair value of financial instruments and derivative transactions(i) Cash and bank deposits and (ii) Cash and bank deposits in trust
As these items are settled within a short-term period, their fair value is nearly equal to the carrying value. Therefore, for these items, thecarrying value is reported as the fair value.
(iii) Short-term debt
As these items are settled within a short-term period, their fair value is nearly equal to the carrying value.
carrying value is reported as the fair value.

Therefore, for these items, the(v) Investment corporation bonds
The fair value of investment corporation bonds issued by the Company is determined based on their market prices.
(iv) Current portion of long-term debt and (vi) Long-term debt
For floating-rate long-term debt, the carrying value is reported as it is considered to be approximately equal to the fair value because such debt
reflects the market interest rates within a short-term period. (However, the fair value of certain floating-rate long-term debt that qualifies forthe special treatment of interest-rate swaps (see “18. Derivatives and Hedge Accounting”) is determined by discounting the sum of its
principal and interest payments net of any cash flows from the interest-rate swap at a rate reasonably estimated to be applicable to similar
fixed-rate debt.) The fair value of fixed-rate long-term debt is determined by discounting the sum of its principal and interest payments at a
rate reasonably estimated to be applicable to similar fixed-rate debt.
(vii) Derivative transactions
See “18. Derivatives and Hedge Accounting.”
Note 3: The fair value of security deposits (with a carrying value of ¥4,167,363 thousand as of October 31, 2012 and ¥4,217,187 thousand as of April
30, 2012) and security deposits in trust (with a carrying value of ¥16,117,895 thousand as of October 31, 2012 and ¥16,213,850 thousand as ofApril 30, 2012) that have been deposited from tenants under lease contracts are not disclosed because they do not have any market price andtheir effective deposit period from the lease inception to tenant’s termination of the lease contract cannot be reliably determined, thus making it
impossible to reasonably estimate their future cash flows, and therefore, it is considered to be extremely difficult to estimate their fair value.

Note 4:

Redemption schedule for cash and bank deposits and cash and bank deposits in trust as of October 31, 2012
Thousands of Yen
Due within one
year

After one year,
within two years

After two years,
within three years

After three years,
within four years

After four years,
within five years

After five years

Cash and bank deposits
Cash and bank deposits in trust

10,907,460
16,451,245

－
－

－
－

－
－

－
－

－
－

Total

27,358,705

－

－

－

－

－

36

Redemption schedule for cash and bank deposits and cash and bank deposits in trust as of April 30, 2012
Thousands of Yen
Due within one
year

After one year,
within two years

After two years,
within three years

After three years,
within four years

After four years,
within five years

After five years

Cash and bank deposits
Cash and bank deposits in trust

10,226,773
16,465,915

－
－

－
－

－
－

－
－

－
－

Total

26,692,688

－

－

－

－

－

After three years,
within four years

After four years,
within five years

Note 5:

Redemption schedule for investment corporation bonds and debt as of October 31, 2012
Thousands of Yen
Due within one
year

After one year,
within two years

After two years,
within three years

After five years

1,000,000

－

－

－

－

－

－

－

11,000,000

10,000,000

5,000,000

13,500,000

Long-term debt

29,000,000

29,500,000

21,850,000

17,500,000

15,900,000

28,400,000

Total

30,000,000

29,500,000

32,850,000

27,500,000

20,900,000

41,900,000

After three years,
within four years

After four years,
within five years

Short-term debt
Investment corporation bonds

Redemption schedule for investment corporation bonds and debt as of April 30, 2012
Thousands of Yen
Due within one
year

After five years

－

－

－

－

－

－

－

11,000,000

10,000,000

5,000,000

13,500,000

50,000,000
53,900,000

23,500,000
23,500,000

23,850,000
34,850,000

15,000,000
25,000,000

10,750,000
15,750,000

16,900,000
30,400,000

Investment corporation bonds

14.

After two years,
within three years

3,900,000

Short-term debt
Long-term debt
Total

After one year,
within two years

INVESTMENT AND RENTAL PROPERTIESThe Company owns in its portfolio certain office buildings (including land) for lease located in Tokyo and other areas.
table summarizes the carrying value and the estimated fair value of these properties.

For the period
from May 1, 2012
to October 31, 2012

The following

Thousands of Yen
For the period
from November 1, 2011
to April 30, 2012

Carrying value
Balance at beginning of the period¥369,488,547

Change during the period
Balance at end of the period
Fair value¥362,390,913(867,540)

7,097,634

368,621,007

369,488,547¥326,738,000¥333,410,000

Note 1: The carrying value represents the acquisition cost less accumulated depreciation.
Note 2: The major increase in the carrying value during the period ended April 30, 2012 was mainly due to the acquisitions of PMO
Hatchobori (¥2,457,762 thousand), PMO Higashi-nihonbashi (¥1,502,783 thousand) and PMO Akihabara (¥3,834,381
thousand) .
Note 3: The fair value as of October 31, 2012 and April 30, 2012 represents the sum of the appraisal values estimated by external realestate appraisers.
The real estate rental revenues and expenses for the six-month period ended October 31, 2012 and April 30, 2012 are presented in “16.
Breakdown of Real Estate Rental Revenues and Expenses.”

15.

SEGMENT INFORMATION

For the periods from May 1, 2012 to October 31, 2012 and from November 1, 2011 to April 30, 2012
Segment Information
Since the Company has been engaged in the real estate leasing business as a single segment, segment information has been omitted.

Related Information
1. Information about products and services
Since revenues from external customers of products and services within a single segment are more than 90 percent of tot al operating
revenues, information about products and services has been omitted.

37

2. Information about geographical areas(1) Revenues
Since more than 90 percent of the total operating revenues were generated from external customers in Japan, geographicalbreakdown of revenues has been omitted.
(2) Property and equipment
Since more than 90 percent of the total property and equipment on the balance sheet are located in Japan, geographicalbreakdown of property and equipment has been omitted.

3. Information about major clients
Since no single external client represents 10 percent or more of the Company’s total operating revenues, information about majorclients has been omitted.

16.

BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES
Real estate rental revenues and expenses for the six-month period ended October 31, 2012 and April 30, 2012 consist of thefollowing:Thousands of Yen

Real estate rental revenues

For the period

from May 1, 2012

from November 1, 2011

to October 31, 2012

to April 30, 2012¥12,701,686¥12,441,505

11,350,854

11,245,514

Rental revenues

8,996,056

8,899,648

Common area charges

2,354,798

2,345,866

Other rental revenues

1,350,832

1,195,991

Parking revenues

271,643

272,242

Incidental income

1,008,499

851,849

Rental revenues

Other miscellaneous revenues

70,69071,9006,040,301

5,726,470

Property management costs

1,152,051

1,148,259

Property management fees

252,464

241,775

Property and other taxes

1,137,794

1,170,874

Utility expenses

1,155,568

975,043

Casualty insurance

21,087

21,297

Repairs and maintenance434,264

246,710

1,669,628

1,717,391

217,445

205,121¥6,661,385¥6,715,035

Real estate rental expenses

Depreciation
Other rental expenses
Real estate rental profits

17.

For the period

LEASES
Finance lease agreements, excluding those in which the ownership of the leased assets is deemed to be transferred to the lessee, aremainly for tools, furniture and fixtures in trust. Depreciation of leased assets under finance lease transactions excluding those in which
the ownership of the leased assets is deemed to be transferred to the lessee are calculated by the straight-line method, over the lease
period with no residual value.
The Company, as a lessor, enters into lease agreements for which fixed monthly rents are due in advance with a lease term ofgenerally two years for offices. The future minimum rental revenues under existing non-cancelable operating lease agreements as of
October 31, 2012 and April 30, 2012 are summarized as follows:
As of October 31, 2012
¥3,867,858

Due within one year

Thousands of Yen
As of April 30, 2012
¥4,200,301

Due after one year

15,374,172

16,953,403

Total¥19,242,030¥21,153,704

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18.

DERIVATIVES AND HEDGE ACCOUNTING

Derivative transactions as of October 31, 2012
(1) There were no derivative financial instruments not subject to hedge accounting.
(2) Derivative financial instruments subject to hedge accounting were as follows:
Thousands of Yen
Notional amount

Hedge accounting
methodType of derivative
instruments

Main hedged item

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Received/floating
and paid/fixedLong-term debt

Due after one year
94,350,000

74,850,000

Fair
value

Method used for
determining fair value(*)* Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one
transaction together with their hedged item, long-term debt, the fair value of these derivatives is included in that of related long-term
debt (see “13. Financial Instruments (Note 2) (iv) Current portion of long-term debt and (vi) Long-term debt” above).
Derivative transactions as of April 30, 2012
(1) There were no derivative financial instruments not subject to hedge accounting.
(2) Derivative financial instruments subject to hedge accounting were as follows:
Thousands of Yen
Notional amount

Hedge accounting
methodType of derivative
instruments

Main hedged item

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Received/floating
and paid/fixedLong-term debt

Due after one year
93,250,000

56,750,000

Fair
value

Method used for
determining fair value(*)* Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one
transaction together with their hedged item, long-term debt, the fair value of these derivatives is included in that of related long-term
debt (see “13. Financial Instruments (Note 2) (iv) Current portion of long-term debt and (vi) Long-term debt” above).

19.

SIGNIFICANT SUBSEQUENT EVENTSTransfer of a Property
On December 21, 2012, the Company entered into a sale and purchase agreement regarding the transfer of the property stated below
and on January 17, 2013, completed the transfer. Consumption taxes and adjustments of property taxes are excluded from the transfer
price.
NOF Kobe Kaigan Building
Type of Assets
Date of Agreement
Transfer Date
Transfer Price
Transferee
Impact on Revenues: Trust beneficial interest: December 21, 2012
: January 17, 2013
: ¥3,050 million: Japanese general operating company: Approximately ¥236 million (miscellaneous expenses excluded) of gain on sales of real estate will berecorded for the nineteenth fiscal period (from November 1, 2012 to April 30, 2013).

39

Independent Auditor’s Report40

Business Structure

Corporate Data
Corporate Name
Nomura Real Estate Office Fund, Inc.
Corporate Office8-5-1 Nishi Shinjuku Shinjuku-ku, Tokyo
160-0023, Japan
http://www.nre-of.co.jp/english/
Date of Incorporation
August 7, 2003
Stock Listing
Tokyo Stock Exchange (Securities Code: 8959)
Fiscal Period
Six months ending on April 30 and October 31
Capital¥185,455,446,935 (as of October 31, 2012)
Number of Units Issued
305,123 (as of October 31, 2012)

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi Chiyoda-ku, Tokyo 100-8212, Japan
Business Office of the Transfer Agent
Corporate Agency Department
Mitsubishi UFJ Trust and Banking Corporation
7-10-11 Higashisuna Koto-ku, Tokyo 137-8081, Japan
Tel: +81-3-5683-5111
Independent Auditors
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg. 2-2-3 Uchisaiwai-cho Chiyoda-ku,
Tokyo 100-0011, Japan
Investor Relations
For further information, please contact the Asset Management
Company:
Nomura Real Estate Asset Management Co., Ltd.
8-5-1 Nishi Shinjuku, Shinjuku-ku, Tokyo 160-0023, Japan
Tel: +81-3-3365-0507

Number of Unitholders
12,610 (as of October 31, 2012)41

Nomura Office Fund’s Website
The Company strives to provide accurate and timely disclosure of information by utilizing the website.
・Strength of NOF, Asset Management Policies, Corporate Profile

・Portfolio Summary, Portfolio Data, Occupancy Rates, Major Tenants

・News, Latest Data, Performance, Distributions, Calendar

We continue to provide information timely and strive to enhance the contents of the website.

Disclaimer
This semiannual report includes translations of certain Japanese documents originally filed under the Financial Instruments andExchange Act of Japan. This report was prepared in English solely for the convenience of and reference by readers outside Japanand should not be considered as a disclosure statement. The original Japanese documents always govern the meaning andinterpretation.
In general, accounting principles and practices used by real estate investment corporations in Japan (“J-REITs”) in
preparing its financial statements conform with accounting principles generally accepted in Japan (“Japanese GAAP”). However,they may differ from generally accepted accounting principles applied in certain other countries. Potential investors should
consult their own professional advisors for an understanding of the differences between Japanese GAAP and generally accepted
accounting principles in the United States (“U.S. GAAP”) or other jurisdictions and how those differences might affect thefinancial information contained herein.
This document has been prepared for the purpose of provision of information only, and should not be construed as anoffer, solicitation or commercial conduct of any nature associated with any specific products. Investors wishing to purchase theinvestment units of Nomura Real Estate Office Fund, Inc. should contact their own securities brokers or dealers. A fee may becharged by your financial instruments business operator in relation to the sale or purchase of investment units.
Although the information contained in this document is intended to be complete and thorough, there is no assurance of precisi on
and safety of the same. Please note that the contents of this document are subject to change or cancellation without prior notice.
It is prohibited to make duplication, reproduction, distribution or use of any part or whole of the information contained in thisdocument without express prior written consent.

42